Avoiding Pitfalls of Business Entity Formation With Doug Bend

Doug Bend

Doug Bend is the Founder of Bend Law Group, PC, a boutique law firm based in San Francisco that advises startups, entrepreneurs, and small business owners on entity formation, entity maintenance and ongoing legal matters. Providing tailored guidance, Doug’s team is integral in forming over 50 new entities each year. With years of experience helping businesses navigate the important nuances of legal entity formation, liability protection, and ongoing business operations. Doug has been featured in numerous publications, including Forbes, Time, and The Washington Post.

Here’s a glimpse of what you’ll learn:

[03:06] Doug Bend explains the drawbacks of using an automated legal entity generator
[05:01] When should sole proprietors form a separate legal entity?
[08:05] The importance of proper business documentation
[11:03] Doug’s advice for anyone thinking about launching a new entity
[14:05] How to identify which entity to choose based on your business goals
[16:50] What to keep in mind before entering a 50/50 ownership agreement
[18:22] Tips for properly dissolving your business
[20:32] What is the Corporate Transparency Act?
[23:41] Why every business owner should focus on building strong financial and legal teams

In this episode…

Starting a business can be exciting, but choosing the proper legal structure and staying compliant can often feel like navigating an overwhelming maze. With many important nuances to consider during the formation process and with various ongoing requirements, how do you ensure that your business is set up for success without being sidelined by unexpected issues?

Doug Bend, a seasoned business attorney and an expert in small business legal matters, believes its key to understand your business’ unique needs and long-term goals before selecting an entity type. He highlights the importance of understanding factors like ownership structure, liability protection, tax considerations, and ongoing compliance obligations, which can vary significantly by state, like California’s high state franchise tax. Doug also stresses that maintaining your legal entity — renewing licenses and adhering to filing deadlines — is crucial for liability protection and to avoid penalties. He warns that failing to address these steps can result in expensive errors and exposure to potential liability.

In this episode of the Pillar6 Podcast, host Roman Polnar sits down with Doug Bend, Founder of Bend Law Group, PC, to discuss avoiding the pitfalls in business entity formation and compliance. Doug explains when and why to transition from a sole proprietorship to a formal entity, the impact of compliance requirements like the Corporate Transparency Act, and how to manage ongoing entity maintenance. Doug also shares actionable advice for effectively dissolving inactive entities to minimize costs.

Resources mentioned in this episode:

Quotable Moments

"It's really important to make sure it's properly set up and also make sure it's properly maintained for liability protection."
"The days are long, but the years are short. It really does go by quickly."
"Hiring professionals, that's their job to track this stuff and to filter what's going to have the biggest impact on their clients."
"If you're winding it down, you really want to make sure that the checkboxes are marked."
"When things matter, they matter a lot, especially when it comes to legal entity setup and maintenance."

Action Steps

Consult with a business attorney and CPA: Engaging with professionals early helps ensure that your business structure is legally compliant and aligns with your tax strategies.
Evaluate your business goals and entity needs: Assess whether forming a legal entity is necessary based on your business goals, such as liability protection, tax savings, or attracting investors.
Strategically plan your entity formation date: Consider forming your legal entity at the beginning of the calendar year to avoid unnecessary franchise taxes and additional costs associated with midyear formations.
Regularly review and update your formation documents: Ensure you understand and routinely review your business documents, including partnership agreements, to reflect any changes in business operations or relationships.
Stay informed about new compliance requirements: Set annual reminders to consult with your legal advisors about new laws that may impact your business operations, such as the Corporate Transparency Act.

Sponsor for this episode

This episode is brought to you by Pillar6. Pillar6 is a wealth advisory firm for successful individuals and families with active lifestyles.

Our clients appreciate having clarity and control over their finances and the peace of mind in knowing that their financial decisions are aligned with their core values, goals, and priorities. We provide financial planning services and wealth management services.

Schedule your complimentary discovery call to talk to us.

To learn more, go to www.pillar6.com or you can email us at hello@pillar6.com.