Choosing The Right Business Entity
The Yale Law Group, PLLC has great respect for the entrepreneurial spirit. Being a small business ourselves, we understand the many challenges that prospective business owners face. From that sympathy, and our 20 years of legal experience as trial attorneys, we can help you make the decision as to what kind of business entity is proper for your situation.
This is not such an easy choice as you would think, to be perfectly frank. There are a variety of choices for business designation and knowing which one is perfect for your business is complicated. Below is a guide to help you familiarize yourself with the basic standards of the types of business entities you can choose from:
This is the simplest form of a legal structure. Simply apply for a business license, open shop and that is it. However, with a sole proprietorship you are the only person responsible. You have no liability protections should there be a breach of duty or an accident.
A partnership is similar to a sole proprietorship in that it is straightforward to set up. However, instead of one person having total control, two or more entities are in control. A solid agreement regarding responsibilities, profit and cost-sharing, will ensure that partnerships remain functional and profitable.
Limited Liability Company
As a halfway point between a sole proprietorship and a corporation, it combines the simplicity of taxation with some of the liability protections of a corporation. Setting it up is more complicated than simply running a sole proprietorship, because it does offer those protections.
A corporation offers the most protection for liability for the owners, but it is more costly to set up and also much more complicated. A corporation is its own tax entity and thus any profits are taxed twice, once at the corporate rate, and once as they are paid out to the owners.
For an entity that has a purpose aside from profit, if it meets the requirements, it can be exempt from paying taxes. Those requirements are complicated however, and you would need to ensure constant compliance, or you would risk having your status revoked.
The Right Attorneys To Help This Decision
Our lawyers have the experience and understanding to help you through this decision and build the necessary documents to get your business started right. Contact us today to schedule your consultation by emailing us at our Denton, Texas, office or calling 940-222-8025.