More than half a million businesses are created every month in the United States. Not surprisingly, the most common reasons people give for starting their own company are their desire to pursue their own passion and their dream of being their own boss. Unfortunately, most people’s dreams don’t include becoming a legal or tax expert. When starting a small business, many owners look for a business attorney, who can guide them through the maze of state and federal rules pertaining to businesses.
Business Formation. Dozens of decisions await those who start their own business, including what type of business to form. Numerous options are available, including:
- Sole Proprietor
- Limited Liability Corporation (LLC)
- Limited Partnership
- General Partnership
- S Corporation
- C Corporation
For many business owners, the most important issues to weigh when deciding what kind of business to form involve taxes and liability. Business attorneys are often highly skilled at helping owners assess their options and maximizing their opportunities.
For example, while a sole proprietorship is the simplest kind of business ownership model, it offers the least amount of financial and legal protection for its owner. In a general partnership, both owners invest their money, labor, etc., into the business, and both are 100 percent liable for business debts. Limited partnerships allow partners to limit their liability.
Meanwhile, corporations are separate entities and, for tax purposes, are considered a legal person. The liability of the owners is limited to the company’s debts and losses. At the same time, setting up a corporation is costly and involves complex paperwork. While taxes for S Corporations are reported on the shareholder’s individual tax forms and taxed at the individual rate, C Corporations are taxed at the corporate tax level and filed separately.
Business Plan. This formal plan identifies your business’s goals and outlines your financial and operational objectives. It can be a valuable tool in attracting new investors to your business, and a business lawyer can provide key assistance in helping you put it together.
Registering Your Business. You’ll need to register with local, state and federal authorities, identifying the kind of business you have selected as well as the name of your business, and perhaps your company logo. Your attorney can conduct a search to ensure that your new company name and logo haven’t already been registered or trademarked, which could trigger legal action against the company before it’s opened its doors.
There are many key decisions for those starting a new company, as an attorney, like a business lawyer from a firm such as Patterson Bray can explain.