When deciding how to organize a company, it is best to seek assistance from a skilled business attorney. This will become apparent, particularly as you evaluate the more complex options. Considerable differences may apply regarding tax advantages, formation expenses, flexibility in business expansion and liability concerns. We have been helping organizations in many aspects of business law for many years all over Ohio.
There are multiple ways to organize or register a business, including:
- Sole Proprietorship: A sole proprietorship is a business owned and managed directly by an individual. While the advantages of this option include the simplistic process of formation and minimal regulatory and reporting requirements, a key disadvantage is the owner’s exposure to personal liability for business liabilities and relatively limited options for expansion and obtaining capital.
- General Partnership: Partnerships have two or more co-owners in a for-profit entity and may be classified as general and limited. Successful partnership formations require transparency and a realistic assessment and description of each party’s stake in the business and responsibilities which must be spelled out in a comprehensive Partnership Agreement.
- Limited Partnership: These organizations are partnerships with one or more general partners responsible for managing the business and limited partners who, while being co-owners, typically are not involved in the daily operations.
- Limited Liability Company: LLCs are means of ownership that limit the owner’s (called “members”) individual liability. They allow for significant adaptability and flexibility in structuring and managing the business and are a practical, limited-liability option for many types of businesses.
- Corporations: Corporations are limited liability legal entities which are generally the most complex in terms of formation and operation. Owners (shareholders) choose a board of directors which, in turn, elect officers who oversee the executive management team and those responsible for day-to-day operations. Corporations offer considerable flexibility in tax treatment of the business. S Corporations have a unique tax structure in which the profits of the business are taxed to the shareholders based on their percentage of ownership.
Additional aspects of business planning must be considered, such as:
- Determining and complying with your annual reporting requirements with the Secretary of State.
- Considering if a corporate tax status such as an S-Corporation or C-Corporation may be suitable options.
- Selecting the name of your business and protecting it legally.
- Understanding the state and local licensing requirements for your business classification.
When forming a business, there are too many legal considerations involved to try to do it without a an experienced attorney. Contact us today to discuss how we can help.