Ready for Business? If yes, it is essential that you get counsel from an entrepreneurial attorney that understands your needs when you are starting a new company. Choosing an entity is one of the most important decisions you will make when you are starting up. There are many factors to consider when choosing the best entity for you, but understanding your short- and long-terms goals is essential.
May Potenza Baran & Gillespie, P.C.’s corporate attorneys regularly work with entrepreneurs helping them choose the best entity for their business and personal needs. Theses entities include the following:
Sole proprietorship
Sole proprietorships are the most common form of business. Sole proprietorships require no paperwork to start, and other than the owner’s, personal tax returns, generally require little to no on going organizational paper work. The risk associated with sole proprietorships is that the owner is personally liable for everything associated with the business, including all of the business’s financial obligations.
Partnership
Partnerships involve two or more people who agree to share in the profits or income of a business—in fact if you’ve gone into business with someone without forming an entity, you are in a general partnership, whether you know it or not. Similar to sole proprietorships, general partnerships do not require formal paperwork to form and may have tax advantages. Warning—partners in a general partnerships have unlimited personal liability for the business and the actions taken by the other partners.
Corporation
Corporations are a legal business entity that is formed to engage in business. Depending on the state in which the corporation is formed, there are certain filings required. Corporations provide limited liability to their owners. Profits of corporations are generally taxed twice—on the corporate tax return and when the profits are shared with the owners.
Limited Liability Company (LLC)
LLCs are currently the most popular form of entity because they provide the limited liability protection of a corporation and the tax benefits of a partnership. LLCs are very flexible for entrepreneurs and typically have minimal on-going reporting requirements. Even though LLCs are easy to form and operate, it is important to invest time building your operating agreement—especially if you have multiple owners of the LLC.
Choosing the right entity for your business is essential maximizing business goals and minimizing your personal risk. Our attorneys at May Potenza Baran & Gillespie, P.C. are well-versed in corporate law. We look forward to helping you build your business from the ground up. For an initial consolation, contact us today.
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