Lawyers Assisting Startups In Downers Grove And Naperville With Business Entity Selection
Building and running a successful business is a complex undertaking, but it can also be incredibly rewarding. However, business owners should be sure they take the right steps when forming a new business or startup. Business law issues can be very complex, and if these matters are not addressed properly when forming a business, they can lead to difficulties in the years to come. To make sure your business will be able to meet your goals, you will want to work with a skilled business formation attorney.
At SBK Law Group, our lawyers have over 25 years of combined experience, and we have worked with a wide variety of businesses, helping them build a foundation for success. Whether you are a first-time business owner or an experienced entrepreneur, we can help you choose the right structure for your business and build a strategy for success.
Choosing A Business Entity
One of the key concerns that a business owner will need to address when forming a business is the selection of the legal entity that will determine how the company will be structured. The choice of entity may depend on the number of owners or partners, and it will affect how issues such as liability and taxation will be handled. Some common types of business entities include:
- Sole proprietorship – This is the most simple type of business structure, allowing the business’s assets to be considered as part of the personal property of a single owner or married couple. Since there is no separation between the business and the owner, the company’s profits and losses will be taxed as part of their personal income taxes, and the owner will be personally responsible for any of the business’s debts or liabilities.
- General partnership – In these cases, a business is treated similarly to a sole proprietorship, but there will be two or more owners. Profits and losses will be divided among the partners, and they will be personally liable for the business’s debts and liabilities.
- Limited partnership – In these cases, one or more partners may serve as general partners, while other partners or investors will serve as limited partners. Limited partners will have less control over the business, and they may be able to limit their exposure to liability for the business’s debts. A business may also be structured as a limited liability partnership (LLP), in which all partners are limited partners who are protected from certain types of liability.
- Limited liability company (LLC) – In this type of business structure, the owner will have some protection from being personally responsible for the business’s liabilities. LLCs are “pass-through” entities, meaning that the profits earned by the business are taxed as part of the owner’s personal income taxes. This can provide financial benefits, since federal law allows for a pass-through tax deduction before applying income taxes.
- Corporation – When a business is incorporated, it functions as an independent legal entity, and stock may be issued to partners and other shareholders who have an ownership stake in the business. A board of directors may need to be named, and the corporation must meet certain requirements for keeping records and filing regular reports. A business may register as an S-corporation, which functions as a pass-through entity, or a C corporation, in which corporate taxes will apply to the business’s profits and losses.
Other Legal Issues For Startups
In addition to selecting the right business entity, startups may need to address matters such as:
- Contracts – A business may need to enter into a variety of contractual agreements, including partnership agreements, vendor contracts, and/or employment contracts.
- Employment matters – In addition to creating employment contracts that provide legal protections for both employers and employees, startups may need to create employee handbooks and other workplace policies or address claims of discrimination or sexual harassment.
Contact A Downers Grove Business Law Attorney
Whether you are starting a new company or need to establish a formal structure for an existing business, our lawyers can help you understand your options, and we will work with you to build a foundation that will provide for your ongoing success. Contact us online or at 630-427-4407 to learn more about our business law services. We provide legal help to business owners throughout DuPage County, Cook County, Kane County, Kendall County and Will County.