North Ridgeville Attorneys Provide Solid Advice on Business Formation
Ohio Business Law Firm Assists in Establishing Business Entities
When beginning a business, one of the decisions you must make is what form of business entity you wish to establish. Legal and tax considerations enter into selecting a business structure, and your form of business entity determines which income tax form you have to file.
Types of Business Entities
The most common forms of business entity include:
- Sole proprietorship. A sole proprietorship is a business run by one individual for his own benefit. It is the simplest form of business organization, the liabilities associated with the business are the personal liabilities of the owner, and the business terminates upon the proprietor's death. Although a sole proprietorship is not a separate legal entity from its owner, it is a separate entity for accounting purposes.
- Partnerships – General and Limited. A general partnership is an agreement between two or more persons who form a for-profit business venture. Each partner contributes money, property, labor, or skill, each shares in the profits and losses of the business, and each has unlimited person liability for the debts of the business. Limited partnerships limit the personal liability of individual partners for the debts of the business according to the amount they have invested in a business.
- Limited Liability Corporation (LLC). An LLC is a combination of a partnership and a corporation. Members of an LLC have operational flexibility and income benefits like that of a partnership but also have limited liability exposure.
- Corporation. A corporation's scope of activity and name are restricted by its charter, and articles of incorporation must be filed with the state to establish a corporation. Stockholders are protected from liability and stockholders who are also employees may be able to take advantage of some tax-free benefits.
- S-Corporations. S-corporations are special closed corporations created to provide a tax advantage, if IRS code requirements are met. Corporate taxes are waived and reported by the owners on their individual federal income tax returns, avoiding double taxation.
The attorneys at Manning & Manning, LLC in North Ridgeville are experienced in business formation, and will advise you as to which entity is the right choice for your business. Contact us online or call 440-290-5970 to schedule your free initial consultation.