Personal Injury Lawyer
Starting a new business can be an exciting endeavor. It can also be overwhelming as you work through many practical aspects of your new entity, including the following.
- Brick and mortar location
- Website creation
- Choosing system providers
With so many things to consider, you must also remember to choose a format for your business. Many new business owners struggle to decide which is best. Here is an overview of the most popular options.
If you are the owner and only employee of a business that you run from home, this may be the most straightforward option. You do not need to file any additional registration papers because you and your company are the same in the IRS’s eyes. Bear in mind that sole proprietorship does not protect you from legal action; if someone sues your business, you risk losing your assets.
Two or more people can choose to form a partnership. General partners share equally in the expenses, profits, liabilities and management of a company. They can record their business income and deductions on personal tax returns. Limited partners only contribute to capital and do not have daily obligations or decisions-making rights. Instead, they receive a share of the business profits and are exempt from personal liability for company debts or missteps. Limited partners can also benefit from the same tax filing benefits enjoyed by general partners.
Limited Liability Company
A limited liability company, or LLC, protects the personal assets of owners and stakeholders from most legal action, except when individual members’ fraudulent activity negatively impacts others. Members can choose to file personal or business tax returns. They are not obligated to distribute profits and losses equally or at all. Most states require LLCs to create Articles of Organization outlining their business structure, and sometimes, an operating agreement indicating management structure and profit distribution. A business lawyer, such as from Brown Kiely, LLP, can advise about all the necessary filing and status options for LLCs.
Corporation owners enjoy personal protection from their companies’ liabilities and debts and a host of tax advantages and deductions. Corporation rules and formal procedures are more intricate than those of other business entities and require the naming directors and shareholders and the payment of state fees at regular intervals. Anyone who intends to incorporate their business should consult a corporate tax specialist for structuring guidance to manage tax payments.
If you are starting a new business, consulting with a business lawyer will ensure your best interests.