Small Business Set-up:
Starting a small business is exciting and scary. As a small business owner, I understand the long list of issues to be addressed before you open your doors for business. One of the first and most important decisions you need to make is what type of business entity you should form.
There are a variety of business entities to choose from:
- Sole proprietorship
- Limited Liability Company
The right business entity to form depends on a variety of issues. Your best business entity will depend on the type of business you are starting, the potential risks, and the potential liabilities your business will have. There is no one standard business form that is right for everyone.
A sole proprietorship is a businesses owned by an individual. There is no legal distinction between a sole proprietor and their business. You may already have a sole proprietorship and not even know it! If you are doing business, the government may treat you as a business entity even though you do not legally register with the state as a business. This may prove to have severe tax consequences for an individual. Additionally, this type of business entity does not provide any liability protection. In other words, your personal assets are the business assets and they could be seized if something goes wrong!
A partnership is very similar to a sole proprietorship in its liability and tax situation; however it is a business with two or more members who share profits and losses. This type of business entity is usually created simply by an agreement. Much like a sole proprietor, you may already have a partnership and not even know it.
It is more common to form the business entity of a limited liability company (LLC) or a corporation. Unlike the other business entities these two business forms decrease personal liability and have tax advantages. Corporations require specific business formalities that LLCs do not and are therefore usually seen with larger businesses.
LLCs and corporations are formed by filing the appropriate documents and paying a fee to the Secretary of State. By forming your business as one of these entities you are providing yourself with personal liability protection. In most instances, your business assets are separate from your personal assets and won’t be impacted if something goes wrong.
Although a lawyer is not required to set-up your business, attorney Christine M Bechtold can help you determine which type of business entity best suits your needs and take care of all the paperwork for you so you can focus on the other important aspects of your small business. Taking care of the legal paperwork with the Secretary of State is one of those issues you can leave to us. Call the Law Office of Christine M Bechtold at 770.466.2700 or at Christine@Bechtold-Law.com today to discuss your business set-up now.