On behalf of Kadish & Anthony Law Group posted in Business Litigation on Thursday, October 18, 2018.
One of the decisions that you have to make when you are starting a business is what legal structure you are going to use. There are several that you can choose from, but you shouldn’t rush into choosing one. Instead, look at the circumstances of the company and make a decision based on that.
Different types of structures provide different benefits and protections. It is always best to evaluate this from an honest perspective. The last thing that you need is to face legal action down the road only to find that you are in more trouble than you would have been if you had chosen a different structure.
If you are an individual who won’t hire employees, you might be able to use the sole proprietorship. You don’t have to pay any fees or file special paperwork to do this. The downside to this is that you are solely responsible for any liabilities for your business. You might be able to purchase insurance to cover these.
If you are going into business with another person, you can’t use the sole proprietorship. You could start a partnership, which is similar in that it doesn’t require special paperwork or fees. You and your partner will each claim your own share of the profits on your own taxes. You will each be responsible for any debts or liabilities the business incurs.
Other business structures to consider are limited partnerships, corporations, limited liability company, co-op or nonprofit. Typically, these are costlier to start than sole proprietorships and partnerships. They can offer more protections, and some have tax consequences that you need to consider. A business law attorney can help you determine which type of business structure is right for you.