Starting a Business

You made the leap into entrepreneurship. You came up with an idea, a product, or a service that you want to bring to market. You have a lot on your plate. You need the money to launch the business. There are so many other considerations. All exciting things but scary at the same time. That said, one of the items that should be on your list is hiring the right attorney before launching your business. When I meet a client who is starting a business, we first discuss how to structure the business. This blog outlines some of the options.



Choosing an Entity

There are several ways to structure your business. Accordingly, the structure depends on your goals and needs. Generally speaking, the type of entity is contingent on your appetite for risk and your business’s management team. The following are types of entities for your consideration.

Sole Proprietorship

As the name suggests, this is a business structure that you and only you own. As the chief cook and bottle washer, you make all of the decisions. However, you may also be responsible, financially and legally, if something terrible happens to the business. Regardless of those risks, setting up a sole proprietorship is simple and straightforward.

Partnerships

When a business is owned by two or more people, structuring the company as a partnership may be a good option. The partnership structure offers some flexibility regarding management. For example, with a general partnership, all partners have equal rights. A limited partnership can also be an option. In this scenario, all partners are not the same. One partner controls the business. The other partners can share in the profits but can also be on the hook for liabilities. Also, the limited partners are often asked to make financial contributions to the business. Partnerships may have some tax advantages as well.

Limited Liability Company or LLC

An LLC can have one, two, or more business owners– known as Members. LLCs are easy and cost-effective to form. The great thing about LLCs is that the Members get the tax benefits of a partnership and protection from personal liabilities. Often, this is the way to go for small, start-up businesses.

Corporation

A corporation structure is the most complex of the entity choices. Simply, a corporation is wholly separated from its owners. Ownership is granted through the issuance of stock. Because there are many different types of corporations (S corps, C corps, B corps, Nonprofit corps), it is essential to understand the tax and legal implications. And due to the complexity, this discussion needs to occur before forming the entity.

Get Help

Starting a business is daunting, but we can help you. So, call us if you are starting a business. We help clients with forming their and ongoing counseling on day-to-day business issues.