Factors to Consider | Your Options
It takes courage and confidence to open your own business and take personal responsibility for your success or failure. Choosing the appropriate legal structure can provide you with a significant amount of protection and minimize your tax burden. Different entity types also involve different levels of reporting and compliance. When evaluating your options, here are the factors to consider, as well as the attributes of the different business forms:
- How well does the business shield you from personal responsibility for losses or liability? – Businesses get sued on a regular basis for a variety of reasons. Ideally, any potential liability of the business will be limited to the business, so that your personal assets aren’t jeopardized to meet obligations of the business. A sole proprietorship or a general partnership won’t provide you with any protection, but a limited liability company or corporation will insulate you from the debts and obligations of the business.
- How much of your hard-earned revenue will be taken in taxes? — As a general rule, thereare two ways that business profits are taxed. They either pass through the business and are reported as personal income on your tax return, or they’re taxed at the business level. The only business form that includes a tax at the business level is the Subchapter C corporation, so as long as you avoid that form, you won’t face double taxation.
- What reporting and compliance does the form require? — Certain types of business structures require you to adopt bylaws, pass resolutions to conduct business, keep minutes and other records, and file regular reports with the state. As a general rule, sole proprietorships, partnerships, and limited liability companies have the least amount of reporting and compliance requirements.
Contact Attorney Howard N. Sobel
At the Law Office of Howard N. Sobel, P.A. we provide comprehensive counsel to businesses and business owners. Contact our office online or call us at 856-424-6400 to set up a free initial consultation (on selected cases). We are currently available by phone, text message, or videoconference only. Evening and weekend appointments can be arranged upon request. We accept all major credit cards.
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