When creating a new business, there are many steps to take before you can formally open. One of the earliest choices you will make is determining the format of the company. There are different risks and rewards depending on the approach you take, so you should not make this choice lightly.
The good news is that an experienced attorney could help you throughout the process of forming your company. From weighing your options to preparing the necessary paperwork, a Woodlawn Hills business formation lawyer could make all the difference. Reach out to attorney Sasha Begum to learn more.
While each type of business structure is unique, they generally have a few specific issues in common. The type of company you form may impact owner liability, tax obligations, control, and complexity. An attorney in Woodlawn Hills could answer questions about each of these factors.
One of the most important issues is whether the owner of a business is personally liable for the debts of the company. Some structures shield owners or shareholders from lawsuits related to unpaid debts or tort claims, while others do not.
Another major issue is the tax obligations associated with running a business. Typically, the income you earn will only be taxed once. However, with some business structures, the government will tax that income twice—first at the corporate level and then at the individual level.
Finally, the choice of business structure may impact who controls the company and the complexity of that process. Some options come with limits on the number of owners, while others require extensive paperwork to register and remain in compliance with state law.
Multiple business options are possible, and each has its own array of benefits and drawbacks. When making this choice, you may have to decide between being taxed on your income only once or being shielded from liability.
The simplest types of companies are sole proprietorships and partnerships. These are suitable for one or two business owners, and they are informal arrangements that do not require much paperwork. The biggest drawback is that owners are not shielded from liability.
Corporations are at the other end of the spectrum. Instead of one or two owners, there could be an unlimited number of corporate shareholders, who are all protected from any liability for company debt. The biggest downside is that the corporation’s income is first taxed at the corporate level, then shareholders must also pay taxes on what they earn individually.
A limited liability company offers most of the best aspects of each type of business structure. While they have a liability shield and no double taxation, strict limits are in place on the number of owners—known as members—that can operate a limited liability company. In Woodlawn Hills, a business formation attorney could help you weigh these options.
If you are planning on starting a new for-profit enterprise, now is a good time to speak with legal counsel. A Woodlawn Hills business formation lawyer could review your goals, advise you regarding your options, and help you select the best possible structure for your needs. Contact Begum Peláez-Prada PLLC today for guidance on forming your new company.
