Choose The Right Legal Structure For Your New Business

 

One of the most important choices you will make when forming your new business is which legal structure to choose from. Also called a business ownership structure or business form, choices include LLCs, partnerships, sole proprietorships, corporations, non-profits, and co-operatives.

 

The type of business entity you choose will depend on several factors such as liability, taxation and record keeping. The key is to find the best fit for your organization. This article is intended to help new small business owners decide which legal structure is best for their business by examining the pros and cons of each, relevant investor issues, and more.

 

Liability for Business Debts

 

No business owner wants to be personally liable for business debts or pay out-of-pocket for a judgment against the organization. How you structure your business at the outset will significantly impact your personal liability. There are a number of business entities available to help shield you, such as:

 

• Corporation
• Limited-liability company (LLC)
• Limited-liability partnership (LLP)
• Limited partnerships (LP)
• General partnership
• Benefit corporation

 

Consider avoiding the sole proprietorship model if you want maximum asset and liability protection. Sole proprietors benefit from the easy setup and freedom of being self-employed, but there is risk involved. There's no legal or tax separation between you and your business in a sole proprietorship. If someone sues your business, they can come after your personal assets.

 

Things to Consider When Choosing a Business Structure

 

When you begin weighing the pros and cons of each business form, the sheer volume of information can seem overwhelming. The most important thing to consider is making sure your particular business model qualifies for your proposed business structure. For example, if you are attempting to form an S-corporation, you can only have a limited number of shareholders. Consider what regulations and reporting requirements you will have to follow depending on the structure you choose.

 

Drafting and Filing Documents When Forming an LLC

 

Creating a limited liability company (LLC) requires you to take several important steps depending on your state. You'll need to first file Articles of Incorporation with the Secretary of State.

 

All members of your LLC should enter into an operating agreement, setting forth the rights and rules of the newly formed company. In some instances, the LLC will also need to apply for a tax identification number.

 

Business Forms and Federal Tax Planning

 

Making the decision to start your own business is a huge endeavor. Tax planning and preparation is key to minimizing tax liability for your small business. Be sure to research U.S. tax codes, in addition to paying attention to changing tax laws each year.

 

How you choose to structure your business at the outset can have lasting implications for the future and affect your profit margin. For example, sole proprietorships do not file tax returns with the IRS. Instead, any business income or losses “pass through” to the owner's personal income tax returns.

 

On the other hand, C-Corporations (c-corps) are subject to “double taxation.” This means they are subject to corporate taxes as well as taxes on individual shareholder income.

 

Call your Amarillo Business Attorney Today and Get Help Setting Up The Legal Structure For Your Business

 

Choosing a legal entity for your business takes research and effort to ensure you are complying with the laws. You may want to hire a business attorney to assist you with the more challenging aspects of small business formation, such as drafting and filing documents and complying with local laws. Whether you find yourself grappling with a business debt liability issue or just need some guidance on whether to go with a sole proprietorship, a local attorney experienced in business organization can help. Many people have similar questions and go through the same line of questioning when deciding how to set up a new business. It can be and often is critical that you get legal help understanding the basics of this process. The best way to get this understanding is to contact an experienced Amarillo Business Attorney near you. Stop and take a breath and call an Amarillo Business Attorney who has had decades of experience.  Pick up the phone and call Amarillo Business Attorney Bill Cornett.  Bill is your choice as an experienced business attorney in Amarillo and the Texas Panhandle.  Don’t waste another minute.  Call him today.

 

Your most important action may end up being the phone call that you make to your Amarillo Business  attorney.  In the Texas Panhandle that call should be to Amarillo attorney Bill Cornett.  Contact the Law Office of Bill Cornett. Be smart…remember these phone numbers (806) 374-9498 or (800) 658-6618.

 

Put Cornett Law Firm’s 50+ years of experience to work for you

 

Bill Cornett, Amarillo Attorney, with Cornett Law Firm, offers affordable, qualified services as an experienced personal injury lawyer and probate attorney. Bill also has experience in estate planning and agriculture law. Sit down with Bill at his office located at 612 S. Van Buren St. in Amarillo TX by calling (806) 374-9498 or (800) 658-6618 TODAY to schedule a free consultation.