We believe that the path to success begins as soon as the idea for the business emerges. The path continues when a business entity is chosen and the business is formed. This is a critical point, because the right choice can strengthen a business’s success, while the wrong choice can have unexpected consequences.
There are many online services that offer do-it-yourself business formation services. While this can certainly save you time and money in the short term, it doesn’t come with the sound legal guidance that we can offer. The long-term cost of choosing the wrong entity far outweighs the short-term savings of using a generic online form. The fact of the matter is that all of the available options—sole proprietorship, partnership, corporation (either Subchapter S or C corporations), limited liability company or limited partnership — each come with their own strengths and weaknesses. It is important to know them in order to make sure that your choice of entity is aligned with your overall business objectives.
A sole proprietorship is a business owned by an individual or an individual and his/her spouse. It is not a separate legal entity. Should the business suffer reversals or failure, the assets of the owners of the business are subject to the business debts conditioned upon appropriate exemption laws.
A partnership is a business organization owned by two or more individuals and/or their spouses. A general partnership is a business organization in which all partners may bind the other partners to partnership obligations. A limited partnership is one where the general partners are responsible for operating the business and the limited partners (generally investors) have limited liability.
A corporation is a legal entity separate from its owners. The owners are known as shareholders. The corporation is managed by its directors and day-to-day management is conducted by its officers. A corporation is formed by filing Articles of Incorporation as well as a number of other tasks. A properly prepared and organized corporation will protect the business owners from many of the business obligations and liabilities and can afford the business owners tax advantages which are not available in a partnership or sole proprietorship form of business. A corporation has perpetual existence, which means that it can exist beyond the life of its owners.
A limited liability company is similar to a corporation, however, it is taxed as a partnership. This form of business ownership is most conducive to real estate ventures, but other business ventures can also benefit.
We will take the time to talk to you and learn about your goals. All of this information is crucial when we are helping you determine the appropriate business entity to form and assisting with the creation of the documents.
