Dispelling Business Formation Myths

Starting a business is always both exciting and intimidating. Even though there is plenty of information on business formation available online, it can be too overwhelming to get started on the right foot. To make matters worse, would-be entrepreneurs are often misguided by myths and misconceptions surrounding business formation.  

Below, we will debunk some of the most common myths and misconceptions about business formation so that you feel less hesitant about starting your business. Our attorneys at Duwel Law provide counsel to aspiring business owners and entrepreneurs and guide them through all stages of starting a business. We are dedicated to providing each client with the personalized guidance they need to set their companies up for success. Our office is based in Dayton, Ohio, but we also serve surrounding areas, including Darke County, Warren County, Miami County, Greene County, and Montgomery County.  

Common Business Formation Myths Debunked 

Believing in myths and misconceptions may lead business owners to make incorrect decisions at the early stages of business formation or deter them from starting a business altogether. Below is a list of some of the most common business formation myths:  

Myth #1: Startups do not need to worry about choosing a business entity. 

Regardless of the size of your business, it is crucial that you consider a variety of factors, including but not limited to the number of personal and business assets, to choose the right business entity. The most common business entities to choose from include a Limited Liability Company (LLC), corporation, sole proprietorship, or partnership.  

Myth #2: You cannot start a business without a complete and detailed business plan. 

While the importance of well-crafted business plans should not be underestimated, it is a common misconception that you need a detailed business plan from day one. If you spend months creating the “perfect” business plan, you may end up never taking action to form your business. In fact, no matter how much time you spend crafting your business plan, it will never account for every possibility and situation that would arise when operating your business.  

Myth #3: You cannot form and operate an LLC if you are not a U.S. citizen. 

In the United States, you can start and operate an LLC or corporation as a non-U.S. citizen. However, one of the requirements for starting an LLC is to have a registered address to receive notices regarding your business.   

Myth #4: Sole proprietors cannot have employees. 

Sole proprietors can hire employees. In fact, operating a sole proprietorship often requires having employees to assist the owner with different business operations. However, having employees adds another layer of complexity as the owner has to comply with all appropriate tax and labor laws that regulate employment. 

Myth #5: You need a lot of money to start a business. 

While it is true that starting a business will require some capital, it does not mean you cannot form a business unless you have hundreds of thousands or millions of dollars. Many small businesses are formed with little to no capital and then expand their operations as they generate revenue over time.  

Myth #6: You will have lots of money after starting a business. 

Unfortunately, many aspiring entrepreneurs have false expectations about starting a business. They often believe that the money will come flowing the moment they start a business. While there may be some exceptions, most businesses do not turn a profit for at least a year or several years after the formation.  

Myth #7: You do not need an attorney to start a business. 

Business formation usually involves many complex procedures and regulatory compliance requirements, which is why attempting to start a business on your own may be too overwhelming. Without legal counsel, you are likely to run into roadblocks and setbacks when trying to start a business from scratch. A skilled attorney can guide you through every step of the business formation process, including choosing the right business entity, filing the necessary paperwork to register the business, obtaining permits and licenses, and many more.  

Dependable Legal Advice   

Forming a business is a complex, multi-step process. However, before embarking on your entrepreneurial path, you need to understand the processes and facts involved. Duwel Law is a two-generation family-owned practice dedicated to offering personalized guidance and helping clients in Ohio through the complexities of business formation. Reach out to our office today to request a case evaluation and get the legal advice you need.