Choosing,The,Right,Structure,F law Choosing The Right Structure For Your Business
When you work with an attorney, you will have no problem reducing the risks associated with getting your case in front of a judge and jury, or other formal court, when you need to. However, every case is different. It is important to work wi Bankruptcy is a situation, wherein an individual is termed as unable to discharge all the debts. When a person or a company is not able to pay off its creditors, it has an obligation to file a bankruptcy suit. In fact, a bankruptcy suit is a
Starting a business can be avery exciting and rewarding venture. However, it involves a lot of preparationand planning, particularly at the initial stages to ensure success. For example,a business and marketing plan must be developed, which is a written documentthat will help you define your business and organize your goals. Here, we willdiscuss the first and most important thing one should do: examine and determinethe legal structure for your business. Your business structure will depend uponfactors including third-party claims, tax considerations and your financialobjectives. THERE ARE BASICALLY FOUR TYPESOF BUSINESS STRUCTURES WHICH YOU SHOULD CONSIDER WHEN PLANNING YOUR BUSINESS.THESE INCLUDE SOLE PROPRIETORSHIPS, PARTNERSHIPS, CORPORATIONS AND LIMITEDLIABILITY CORPORATIONS (LLC). SOLE PROPRIETORSHIPA sole proprietorship is ownedand operated solely by one person (a spouse, if any, may be involved in thebusiness). The owner must operate the business using his or her legal name,rather than a fictitious name or a d/b/a (doing business as). ProsSimple to form or create. Nolegal filings required. No business return to file (though some states may requirethe filing of an unincorporated business return).Tax reporting is simplified-profitsand losses are reported on individual tax returns. CONSOwner not afforded protectionagainst personal liability. If business is sued, the owner's personal assetsmay be at stake. PARTNERSHIPCreated by to or more peoplewho agree to share in the profits and losses of a business. PROSNo formal organization process(other than registering the business name), but partnership agreement is highlyrecommended Tax reporting is simplified. CONSPartners do not haveprotection against personal liability-each partner is personally liable for thenegligence and wrongdoings of the other partners' share of debts and obligations. CorporationA legal entity formed in aparticular state generally by the filling of Articles (or a Certificate) ofIncorporation with the Department of State. PROSThe corporation is treated asa separate "person" and generally shields the owners (known asshareholders) from personal liability. Familiar form which often"credentializes" a business. Corporate form helps to attractinvestors. ConsStrict corporate recordkeeping required-if not, corporate status can be challenged. Additional costsinvolved (e.g., incorporation filing fees; corporate tax return preparation) LIMITED LIABILITY COMPANY(LLC)A legal entity which isessentially a hybrid between a corporate and a partnership. PROSAffords the owners withprotection against personal liability (like the corporation) coupled withpreferential tax treatment (like a partnership). Failure to maintain strictrecord keeping will not negate the status of the LLC. Assets held in an LLC maybe even greater protection to owners(as opposed to a corporation) againstthird-party claims. ConsAdditional costs involved(i.e., formation filing fees). Relatively new in most states so LLC's are notwidely understood by the general public and case law regarding them is limited. It is important to rememberthat all businesses are not created equally. Learn as much as you can about thevarious business forms. Consult both an attorney and an accountant beforereaching a final decision. Turn your vision into a reality. You can do it!
Choosing,The,Right,Structure,F