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When is the best time to form a company?

Salinas, CA |

I am going to be selling a beverage product. Should I wait until it is bottled and packaged and has proven sales or should I just form my company now?

Attorney Answers 4


I am not licensed in your state. However, my suggestion is not to wait. The liability issue may arise at any moment. Hire an attorney in your locality and set up your company as soon as possible. You will understand the benefit later on. Best

This reply is offered for educational purpose only. You should seek the advice of an attorney. The response given is not intended to create, nor does it create an ongoing duty to respond to questions. The response does not form an attorney-client relationship, nor is it intended to be anything other than an educated opinion of the author. It should not be relied upon as legal advice. The response given is based upon the limited facts provided by the undisclosed individual asking the question. To the extent additional or different facts exist, the response might possibly change. Attorney is licensed to practice law only in the State of New York. Responses are based solely on New York Law unless stated otherwise. Pursuant to Internal Revenue Service guidance, be advised that any federal tax advice contained in this written or electronic communication is not intended or written to be used and it cannot be used by any person or entity for the purpose of (i) avoiding any tax penalties that may be imposed by the Internal Revenue Service or any other U.S. Federal taxing authority or agency or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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I strongly advise that you form the company now, before you begin operations of any sort, which would include entering contracts with the distributor and bottling facility. I also recommend that you begin to build a relationship with a business attorney, preferably one with commercial transaction experience. That relationship may prove invaluable to you in the long run.

This response is not intended, nor should it be construed as legal advice. Any information provided is for educational purposes only. To schedule an appointment for an attorney-client privileged consultation, contact me at 530-231-4949. The exchange of communications through and similar social media does not establish an attorney-client relationship with me or my office. Thank you.

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You will want to file your business now before you start doing business. For employment law reasons, contract formations, leasing reasons, trademark registration and food/alcohol compliance reasons, you want to do this in the company rather than an individual and then transfer to your company.

The above is general legal and business analysis. It is not "legal advice" but analysis, and different lawyers may analyse this matter differently, especially if there are additional facts not reflected in the question. I am not your attorney until retained by a written retainer agreement signed by both of us. I am only licensed in California. See also terms and conditions item 9, incorporated as if it was reprinted here.

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I agree with all of the lawyers that recommend you set up an entity now. I want to caution you against doing this yourself. While it is very easy to go on line and set up a corporation, limited Liability Company, there are many important things to consider in which entity is best for you. The value of going to a lawyer to help you with this is not the filing for the entity with the secretary of state; it is in getting good advice as to what entity is best for you given many variables. You need to consider ease of operation, risk of liability, personal wealth, insurance, tax treatment, how fringe befits and retirement benefits may be affected by different entity choice.

Only a lawyer with tax and business experience is going to be able to help you here. For the best outcome you will want your attorney to work closely with your tax accountant. It may seem expensive to pay both of their fees, but in the long run, a collaborative effort including your CPA and Your Attorney will pay off and you will be on your way to a strong successful business.

Every situation is different, it is important to discuss your legal issue with a knowledgeable attorney in your jurisdiction. To schedule an appointment with me please contact me at 800 220-4205 or

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