Business Formation Basics
Incorporating your business is the foundation for any company you wish to form. When a company incorporates it becomes its own legal business structure completely separate from the individuals who founded the business. This incorporation creates a legal entity to do business, apart from the individual owners. Some benefits of incorporating include: more credibility with potential and current customers, vendors and employees, a shield from liability, and also being able to write off certain business expenses on your taxes.
As mentioned above, it is important to be well informed before structuring your company as the way in which it is formed will determine any liabilities you and/or your fellow business partners will have. For instance, with a limited liability company, the owners generally are not personally liable for the company’s debts; whereas in a partnership, every partner involved in the business can be liable for the actions of their fellow partners and any debt the partnership has incurred. Along with liability comes tax implications and other important state governance requirements. For these reasons it is important to fully understand what you are structuring to protect yourself and your business.
WHAT ARE SOME QUESTIONS YOU WANT TO ASK YOURSELF BEFORE INCORPORATING?
Determine where you want to incorporate;
Determine who, if anybody you, you want to form the entity with;
Consider who will be your registered agent (the person or company responsible for accepting all legal documents on your behalf); and
Have a business plan ready for your accountant and attorney so that they can look at your goals and current state to determine the best course of action for your business.
WHAT ARE THE MAIN LEGAL STRUCTURES AVAILABLE?
Sole Proprietorship
Partnership
Limited Liability Company
Corporation
Nonprofit
Once you have formed your entity, you will need additional documents such as: documents for use within the company; contractual documents governing your relationships with other businesses and customers; and any other documentation specific to your needs regarding your business transactions.
The formation of most businesses benefit from the training and expertise of an attorney. Let us help you determine the best legal structure for you and your business today!
If you have any questions regarding business formation please comment below, we’d love to hear from you.
