Starting a business is a new and exciting venture. You have many ideas and goals for your startup, and you’re excited to make lifelong customers. However, there’s much more to forming a new business than simply deciding to go into business, leasing a commercial building, and advertising your products and services. You need a business startup lawyer.
Forming your business correctly based on your individual needs and goals is critical to its future success. What business entity you form plays a significant role in how your company will pay taxes going forward, so it’s important that you get it right from the start.
Types of Business Entities
There are a variety of business entities you can choose from, and each is designed to meet different business needs.
A sole proprietorship is the easiest type of business to set up and works well for individuals who are going into business for themselves. However, this type of entity may not be suitable for some individuals who are going into a very high risk business, since it affords the business owner no protection. Personal assets, such as your bank account or your home, could be at risk.
A joint venture involves the partnership of two or more people who pool their resources together to go into business. However, like a sole proprietorship, this entity does not protect the personal assets of the business owners. Each individual owner is responsible for the profits and losses of the business, as well as taxes that are owed.
Limited Liability Partnership (LLP)
A limited liability partnership, abbreviated as LLP, is a formal partnership that requires yearly reporting and a legal partnership agreement. Each partner is allowed to participate in the management of the business, and unlike a sole proprietorship or a joint venture, a partner’s personal assets are not on the line. A partner may lose assets in the LLP should loss occur, however, private assets like homes and vehicles are protected.
A corporation is a business entity that is separate from its owners, although it maintains many of the same rights in a business that individual owners have. Shareholders in a corporation can enjoy the profits of a business (usually through stock appreciation or dividends) but are protected from liability for the company’s debts.
Limited Liability Company (LLC)
Like a corporation and a limited liability partnership, an LLC or limited liability company protects business owners from personal liability for the company’s debts. While a corporation can continue to exist in the event that one of the shareholders pass away or declares bankruptcy, a limited liability company must be dissolved.
Each type of entity has its own benefits and drawbacks, and determining which entity best fits your business and its goals can be difficult to do. Speaking with an experienced New York business start up lawyer is the best way to gain a better understanding of each of the different business entity types and how they have the potential to help or hurt your new business.
Contact Jeffrey Shepro, P.C. Today
Attorney Jeffrey Shepro has significant experience working with new business start ups and can provide you and your partners with the information and resources you need to make a sound decision on how to form your business and move forward towards your goals. Contact Attorney Shepro today for a consultation to discuss your unique legal needs by calling (212) 575-2683 or sending an email to: firstname.lastname@example.org.