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My wife and I are federal government employees and are planning to retire in May of 2017. I already know that I want to open a franchise restaurant when I retire, and I've been in contact with the franchise company. This particular restaurant will be a small operation. About the closest thing to it that I can name without disclosing the actual business name is the Auntie Anne's soft pretzel store. What I want to do now is go ahead and prepare a business plan, which the company will do for a $500 fee that will be deducted later from the $20K licensing fee. Then, over the coming months, I want to gradually start acquiring the necessary equipment to operate the business so I will be mostly ready to go. My questions are; (1) Is there any harm in preparing the business plan this early? (2) Which entity should I use?--I'm thinking an LLC. (3) Is there any harm in creating the business entity this early, even though I'm over a year away from actually acquiring space and operating the business?

Congratulations on your choice to join the ranks of small business owners!

To answer your specific questions:

1. I see no harm at all in preparing a business plan a year ahead of time.  A business plan is essentially a road map of where you want to go and how you plan to get there.  Just don't get married to the plan.  The advantage of having it as early as possible in the process is that you can see where things are going exactly according to plan and where things may have to change.

2. There are many factors that go into the type of entity you should choose.  While an LLC is an excellent choice in most cases for a small business, there are exceptions.  In addition, there are situations where an LLC should be used but where it should elect to be treated as an S corporation for income purposes.  See "Should Your LLC Elect to be Treated as an S Corp?"  Before making your choice, you should find a business attorney to advise you.

3.  While there is no great harm in forming the entity early, it will accelerate you requirements for filing annual reports with your state and probably tax returns as well.  Unless you have a significant reason for creating the business entity, I would wait until you really need it.

I hope this helps! Good luck.


Starting a Small Business

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David K. Staub


I am a business and tax attorney and have spent more than 35 years assisting people in starting a wide variety of businesses. I can answer questions about the basic differences between the various entities available to new businesses, including limited liability companies, corporations, S corporations and partnerships. I can provide guidance in other areas facing start ups, such as hiring employees, signing contracts and obtaining necessary licenses. I can also direct people to sources for answers to specific legal questions which cannot be answered in a forum of this nature.


I have an extensive practice in the mergers and acquisitions area and have been involved in the tax and legal issues on hundreds of business transactions.

Staub Anderson LLC
Illinois business attorneys

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Illinois State Bar Association; Chicago Bar Association (former Chairman of the Corporation & Business Law Committee and former Chairman of the Mergers and Acquisitions Subcommittee; former Executive Committee member, Federal Tax Committee and Chairman of subcommittee on general tax issues); Keystone Foundation (Trustee); Association for Corporate Growth; Midwest Entrepreneur Forum; Midwest Association of Alpha Delta Phi

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Harvard Law School, J.D., 1977; University of Illinois, B.S. in Accounting, with highest honors, 1974

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