Small Business Planning
Most Common Types of Business Entities
Corporation: A corporation is formed by filing Articles of Incorporation with the State. Owners are "shareholders" and transfer assets to the corporation in exchange for "shares" in the corporation. The shareholders elect the directors of the corporation who run it.
Limited Liability Company: A limited liability company is formed by filing a Certificate of Formation with the State. Owners of the company are called "members" who transfer assets to the company in exchange for a percentage ownership interest in the company. The company is managed either by members or by a manager hired by the members.
Why Incorporate:
Limited Liability: in the event a third party successfully sues your business, your personal assets will be protected (except in the case of certain professional businesses).
Protection from Acts of a Partner: in a general partnership you are responsible for the wrongful acts of your partner. In a corporation r limited liability company an owner is not responsible for the wrongful acts of other owners.
Two or More Owners:
If there are two or more owners it is important to have an agreement addressing such issues as:
-Death, disability or retirement of a co-owner
-Bankruptcy or divorce of a co-owner
-When a co-owner may withdraw from the business
-Management rights and responsibilities
-Under what circumstances a co-owner must contribute additional money or assets to the business
The world of business entities is complex and can be difficult to navigate. Contact us today to schedule a meeting with one or our experienced business law attorneys.
Corporation: A corporation is formed by filing Articles of Incorporation with the State. Owners are "shareholders" and transfer assets to the corporation in exchange for "shares" in the corporation. The shareholders elect the directors of the corporation who run it.
Limited Liability Company: A limited liability company is formed by filing a Certificate of Formation with the State. Owners of the company are called "members" who transfer assets to the company in exchange for a percentage ownership interest in the company. The company is managed either by members or by a manager hired by the members.
Why Incorporate:
Limited Liability: in the event a third party successfully sues your business, your personal assets will be protected (except in the case of certain professional businesses).
Protection from Acts of a Partner: in a general partnership you are responsible for the wrongful acts of your partner. In a corporation r limited liability company an owner is not responsible for the wrongful acts of other owners.
Two or More Owners:
If there are two or more owners it is important to have an agreement addressing such issues as:
-Death, disability or retirement of a co-owner
-Bankruptcy or divorce of a co-owner
-When a co-owner may withdraw from the business
-Management rights and responsibilities
-Under what circumstances a co-owner must contribute additional money or assets to the business
The world of business entities is complex and can be difficult to navigate. Contact us today to schedule a meeting with one or our experienced business law attorneys.