There is no question about it… the Covid-19 pandemic has reshaped us all. It challenged us to think outside of the box just to put food on the table and keep a roof over our heads. The pandemic not only reshaped who we are as people, but it redefined the way we do business in this world – to working from home and the use of delivery services. We have come to realize we are no longer forced to conduct business the way we used to. We are challenging to break free from the mold and seek out all available possibilities.
With that being said, the way we do business may be different now, but the types of businesses entities are still the same. If you are considering starting your own business, it is important to put careful consideration into the type of business structure you will have. The type of entities you select can impact how much you pay in taxes, the paperwork you must file, your personal liability, and even your ability to raise money. Choosing the right type of entity takes research and careful assessment.
To start our path down the business entity trail, we need to start with the most basic way of doing business. This takes us to a sole proprietorship. Operating as a sole proprietor is the most basic form and manner of doing business. A sole proprietorship is not a business entity. A sole proprietor is a person who does business without any formal entity in place. When a sole proprietor engages in business, he/she does not have any liability protection for things which may arise because of doing business or for injuries which may occur while being engaged in business activities.
Limited Liability Company (LLC)
Our next step on the business entity trail is a limited liability company. Limited liability companies are a relatively new type of business entity when looking at the different types of entities available to businesses. A limited liability company is owned by members and managed by either members or managers. A limited liability company is considered a disregarded entity for tax purposes; meaning the business’s income becomes the income of the owner(s) without the company being required to file a separate income tax return. As the name suggests, a limited liability company offers protection from liability for unsecured debts of the business and any injury which may occur as a result of doing business. A limited liability company can be set up as a series limited liability company, which compartmentalizes various business activities of the company, or as a professional limited liability company for trades such as medicine, dentistry, or legal services. Professionals who chose a professional limited liability company are not shielded from liability for possible malpractice claims.
Limited Liability Partnership (LLP)
A limited liability partnership is like a limited liability company, except rather than having members, it has partners. A limited liability partnership is typically managed by a managing partner. In a limited liability partnership, partners are not responsible for the misdeeds of the other partners.
The next step takes us to the trusty corporation. Corporations are a type of business entity which creates liability protection for its shareholders. Decisions of the corporation are generally made by a Board of Directors elected by the corporation’s shareholders. Corporations can either be disregarded entities (S-Corporation) or they can be recognized by the IRS as a separate entity (C-Corporation). Corporations have certain requirements which limited liability companies do not, such as annual meetings of the shareholders and directors.
Call our office for a free consultation with one of our corporate attorneys to discuss which type of business is right for you.
WHERE CAN I FIND THE BEST ATTORNEY TO HELP ME WITH MY LEGAL MATTERS?
As always, the lawyers at Tigges, Bottaro & Lessmann, LLP Law Firm are centered on providing exceptional legal services to the people of Siouxland and the surrounding area. The attorneys pride themselves on being first-rate advocates, ensuring their client’s rights and interests are protected and each voice is always heard. Using their knowledge, expertise, and over 240 years collective experience, they aim to deliver the best results possible for their clients.
THEY ARE SIOUX CITY LAWYERS YOU CAN DEPEND ON…
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