There are certain steps you need to take when forming a new business. Long before you launch your operations or serve your first customer, you will need to choose what type of entity to form. From corporations to limited liability companies (LLCs), there are many options available. An Alamo Heights business formation lawyer could help you review these options and choose the right one for your organization.
Selecting the type of legal entity you intend to pursue is an essential part of forming a new business. A dedicated business attorney such as Sasha Begum could guide you through your options.
As an entrepreneur, you have a lot of options when selecting a formal entity for your new business. You could choose informal arrangements, such as partnerships, or more complex options, such as corporations. A business formation attorney in Alamo Heights could provide insight into the benefits and drawbacks of each option.
One of the most important considerations is personal liability. Most people prefer to avoid being personally responsible for any debts or obligations owed by the business. If your company goes under, protection from liability can shield you from the brunt of those debts. While corporations are generally shielded from liability, the same is not true for sole proprietors.
The extent of an owner’s control is another important consideration. Sole proprietors have total control over their business, while partners usually split responsibilities. With corporate entities, a founder could even be removed from a leadership position against their will.
Tax implications are also a major concern. In some situations, the owners of a business will end up being taxed twice on their income—once at the corporate level and again individually.
Given all the relevant factors, it can be challenging to determine the right approach for setting up a company. In Alamo Heights, a business formation attorney could assist you with this process by answering questions about each option.
The simplest type of business is a sole proprietorship, where the owner is an individual. There is no requirement for such a business to be governed by a formal document. The major downside is that, as the sole owner, you would be fully liable for the obligations of the company.
The largest companies are generally corporations. There is no limit on the number of people who can have an ownership stake in such a business, and the law allows for flexibility by offering shares to the public. While stakeholders are shielded from liability, these companies will pay more tax.
LLCs combine many of the benefits of corporations and sole proprietorships. Owners are shielded from liability and do not have to pay income tax at the corporate level. However, there is a limit on the number of owners who can be involved.
The creation of a new enterprise is not something you should take lightly. Selecting the appropriate setup is vital for success, and any mistakes during this phase could be costly.
Fortunately, you do not have to make these choices on your own. Contact an Alamo Heights business formation lawyer from Begum Peláez-Prada PLLC today to get started.
