How to Structure a Health Tech Business
There is quite a bit of legwork that you need to do before you launch a health Tech business. The experienced health tech business attorney at Innova Health Law can help you consider all of the necessary factors before you begin your venture.
Business structure is crucial to any startup or operating company. It can govern both how you run your business and the tax structure that you may face. Not only do you need to choose the appropriate business form, but you also need to structure your business with durable and clear agreements that define the rights and obligations of anyone involved.
The first step that you need to take is to schedule a free legal strategy session with a health tech business attorney at Innova Health Law today. When you hire us as your management services organization (MSO) lawyer, we can give you key legal advice that could help you appropriately structure your business.
How to Choose the Right Business Structure for Your Health Tech Company
A health tech company is like any other startup in that you must choose the right form for your business. You are balancing issues like providing the fullest amount of legal protection possible for yourself, along with ease of operation and the ability to grow your company. The decision that you make at the outset of your business could determine your future success. You may consider the following choices for your business:
- Partnerships: There is the potential for shared efforts and pooled resources, but also higher liability for individual partners (unless you have a limited liability partnership)
- Limited Liability Company (LLC): An LLC is a flexible business that provides you with some protection for personal liability as well as tax benefits
- C Corporation: This structure is preferred for attracting venture capital, but there may be the potential for double taxation (still, many startup health tech businesses choose C Corporation status)
- S-Corporation: There is tax efficiency for smaller operations, but there are ownership restrictions on the number and types of shareholders
The Ramifications of Your Business Structure Choice
When you are beginning a startup business, you also need to look into the future to see what your needs are as your company grows. You may need to raise venture capital or take out a loan to fund the growth of your company. Then, you are concerned with how your company may appear to investors. Potential investors must have a clear idea of your business structure, and it must be easy for them to perform the necessary due diligence that will give them confidence to do business with your company.
Structuring Your Ongoing Business Operations and Risk Management
Before launching your business, your management services organization attorney will prepare key governing documents, such as bylaws and corporate policies, that establish how your company operates. It’s also essential to identify potential risks early and build internal processes that help minimize them. Your legal counsel can design a compliance framework tailored to your operations, draft the necessary policies and procedures, and later conduct periodic audits to ensure your organization remains compliant and effectively manages exposure to regulatory or operational threats.
Structuring Partnership and Contract Agreements
The appropriate structure also applies to agreements that you may reach with both your fellow partners and your stakeholders. The language that you have in these documents governs your relationships, and you are both bound by what you have agreed to in writing. You want to lay out the exact contours of the agreement in clear and unambiguous language. If there are any ambiguities in the contract, you could end up with unintended consequences and potential uncertainties if any dispute would ever go to court.
The same thing goes for agreements that you have with your partners. If there are any litigated disputes, a judge would go first to the plain language of the partnership agreement to decide your case. It is essential that you structure any partnership or LLC operating agreement in the proper way to provide for a clear and unambiguous statement of the rights and responsibilities of each of the partners or members. An experienced MSO attorney can draft any partnership or operating agreement, reflecting your needs and wishes.
Contact a Management Services Organization Lawyer to Help Structure Your Health Tech Business Today
To learn more about what you need to know when starting a health tech business, speak to an experienced healthcare law attorney at Innova Health Law today. You can schedule a free discovery call by filling out an online contact form or by calling us today at (281) 936-9904.