Of all the choices you make when starting a business, one of the most important is the type of legal organization you select for your company. This decision can affect how much you pay in taxes, the amount of paperwork your business is required to do, the personal liability you face and your ability to borrow money.
The Internal Revenue Service states this on its website, specifying just how the business structure you choose will impact you, as well as your business, for years to come.
Given that the best structure for a business will depend on various factors – such as the work/services of the business, the size of the business, the goals and needs of the owners, etc., it’s advised that you consult with an experienced attorney like Denver Business Lawyer Thomas E. Downey when you need help choosing a business structure. However, to clarify just what your options are, this blog series will point out and discuss the 5 main options for legal business structures.
As the simplest and most common structure for business organizations, sole proprietorships typically only involve one person who owns and manages the business. So, if you work from home and/or alone (regardless of whether this work is part- or full-time), this can be a good option for you.
Some of the benefits of sole proprietorships can include (but are not limited to):
Some of the disadvantages of sole proprietorships can include (but may not be limited to):
When multiple individuals will be the owners and managers of a business, partnerships may be a better option when choosing a business structure. With partnerships, there are two options:
Some of the benefits of partnerships can include (but are by no means limited to):
Some of the drawbacks of partnerships can include (but are by no means limited to):
Far more complicated than sole proprietorships and partnerships, corporations involve setting up the business as an independent legal entity – that is, independent of its owners. While corporations must be set up in accordance with all state laws and they can be subject to various regulations, some of the benefits of corporations can include (but are by no means limited to):
Some of the drawbacks of corporations can include (but are by no means limited to):
Arising in 1977, LLCs have become a popular and attractive option for those choosing a business structure, as LLCs can offer some of the major benefits associated with partnerships and corporations.
As the name implies, LLCs are intended to limit the liability that owners shoulder; additionally, they prevent owners from experiencing the double taxation that can plague corporations.
Some of the other benefits of LLCs can include that they:
Some of the drawbacks of LLCs can include (but are by no means limited to):
As an alternative to C corporations (or just traditional corporations as discussed in the previous part of this blog series), S corporations can be more appealing options for the owners of small businesses.
Some of the benefits of S corporations can include (but are by no means limited to):
Some of the drawbacks of S corporations can include (but are by no means limited to):
Do you need help choosing a business structure, setting up your business and/or resolving any business legal matter? If so, it’s time to contact Denver Business Lawyer Thomas E. Downey. Since 1983, Attorney Thomas Downey has been providing individuals and businesses in the Denver Metro Area and throughout the U.S. with the highest level of legal service for their litigation and business legal issues.
This means that you can count on him to provide you with personalized service while expertly guiding you through the legal system so that you can achieve the best outcomes to your important legal matters.
To find out more about how Denver Business Lawyer Thomas E. Downey can help you, set up an initial consult with him today by calling (303) 813-1111 or by emailing us using the contact form on this page.
From our law offices in Centennial, we serve clients throughout Colorado and the U.S.