Brad Johnson of Johnson Law Group recently sat down with our monthly Entrepreneur Group to talk about what form of business entity is best for your business. Check out the great summary here:
From Johnson Law Group International PLLC
As an expereinced business and commercial law firm in the Washington, DC metropolitan regision and in the State of Vermont, Johnson Law Group is dedicated to helping our clients with the legal issues encountered in registering their corporate entities. In addition to preparing and ensuring timely and efficient filing of your organizational documents, we will ensure you establish the most advantageous corporate structure for tax and liability purposes. This includes providing statutory language in your corporate documents to protect your business and personal assets. The first thing any business must do is determine the right structure for its business entity, such as a corporation or limited liability company.
A Sole Proprietorship is a business that is owned by a single individual. It is the easiest and least expensive to set up; the sole proprietor has full control over all business decisions; there are minimal legal restrictions or requirements; the proprietor owns all profits and reaps all benefits; and there is no requirement to pay unemployment taxes. The disadvantages of a sole proprietorship include personal liability for all business transactions; difficulty obtaining long-term financing; no unemployment benefits if the business fails; and only limited tax savings.
A Partnership is a business owned by two or more persons who have agreed, verbally or in a formal written statement, to operate a business. A partnership is easy to establish; the partners share workload and responsibilities; financing is easier to obtain than for a sole proprietorship; and the partners share all profits and reap all benefits of ownership. On the other hand, partnerships may be more expensive to start; the partners have unlimited liablity for business expenses; each partner is bound by the actions of the other partner; decision-making authority is divided; the loss of one partner may dissolve the business; and the partnership may be difficult to end.
A Corporation is considered by federal and state law to be a distinct legal entity that exists separately from the people who own, manage, control, and operate it. When you operate a business as a sole proprietorship, any liability is assumed by the owner of the company. Therefore, the owner’s personal and business assets are vulnerable to litigation. Incorporating a business, however, creates a separate entity from that of the owners or share holders and, if operated properly, assume the risk of liability.
A Limited Liablity Company, or LLC, is similar to a partnership but has the legal protections of personal assets that a corporation offers without the burdensome formalities, paperwork and fees; however, the exact rules for forming an LLC vary by state. Forming an LLC may help a new business establish credibility with potential customers and provide tax benefits without the need to follow all the restrictions imposed on corporations.
Our firm’s approach to corporate and business law practice involves assistance with many common business activities, including:
- Registering your business entity with the local jurisdiction by preparing and ensuring timely and efficient filing of Articles of Incorporation or Organization.
- Establishing your business entity’s Bylaws or Operating Agreement that details the business arrangement, including members’ percentage ownership, roles, rights and responsibilities.
- Preparing the requisite tax documents to ensure proper registration with the appropriate tax authorities. The firm also secures your Federal Employer Identification Number (EIN) to comply with IRS regulations.
- Establishing or serving as Registered Agent for your business entity, pursuant to jurisdictional designation requirements.
- Obtaining proper licensing or permits to ensure compliance with all applicable local, state and federal regulations, avoiding expensive fines and penalties that may jeopardize your entity.
- Assuming ongoing responsibility for ensuring that our business clients minimize risk by ensuring implementation of sound business practices and ongoing compliance with local regulatory requirements. For every client, we maintain a complete and up-to-date set of corporate documents that are accessible electronically or in paper form.
- Serving as a resource for business templates, contracts and agreements, human resource issues and other critical components of operating a successful business.
At Johnson Law Group, we understand the legal issues involved with establishing your business entity and have the experience neeeded to help our clients with all areas of business operations. Making use of our extensive litigation experience to incorporate applicable safeguards, we pay special attention to, and help our clients assess, how best to establish a company in light of relevant tax and liability concerns, including the best methods of limiting them.
As a service to our clients, we do not charge for initial consultations. Please contact our office at 202-544-1515 or firstname.lastname@example.org to arrange for an appointment.