Helping You Decide On The Right Business Formation
Starting a business is an impressive endeavor – one that can come with many obstacles. Choosing the right business entity is a crucial first step, determining how your business is structured and outlining everything from the types of taxes you pay to your liability level as the owner.
Choosing the formation that’s best for your business can depend on many factors. At Oliver Hughes LLC, we are experienced business formation lawyers who understand the importance of choosing the right formation to position your business for success. Let us help you make an informed decision about your business structure.
What Are The Different Types Of Business Formations?
In Georgia, there are four common types of business formations. Each one has its own advantages and disadvantages. It’s crucial to consider every option before you make a decision.
Sole Proprietorship
As the name suggests, a sole proprietorship is individually owned and operated. It’s the simplest of the different formations to set up as it requires minimal paperwork. Even tax work is simple as the business income and expenses are reported on the owner’s personal tax form.
However, because there is only one owner and no legal separation between the owner and the business, sole proprietorships can have a significant disadvantage when it comes to disputes or debts. The owner will be personally responsible for any liabilities.
Sole proprietorships are an ideal choice for low-risk entrepreneurs who are just starting out and want to test their business before creating something more formal.
Partnership
A business partnership is when there are two or more individuals who share ownership and management of the business. In partnerships, the parties will need to develop an agreement for how they will share profits, losses, and manage daily responsibilities and tasks.
However, as with sole proprietorships, there is no legal separation between the partners and the business. This means the partners are personally responsible for any liabilities that the company may face.
A partnership is a good option for businesses with multiple owners or professional groups, such as doctors or architects.
Limited Liability Company (LLC)
Limited liability companies are a popular choice for many business owners because they provide some of what is favorable about a partnership with the protections of a corporation. This type of formation provides limited liability for the owners which protects them from any business disputes or debts.
LLCs also use a “pass-through” process when it comes to taxes, which allows profits and losses pass through to each owner’s individual tax returns instead of to the company.
An LLC may be a smart choice for people who have significant personal assets they want to protect or for medium-risk businesses.
Corporation
Unlike with the other types of formations, corporations are completely separate entities from its owners. This provides the highest level of personal liability protection for the owners when it comes to any kind of dispute or liability issue.
Corporations are also taxed as an individual entity, but there are certain tax benefits as corporate taxes may be lower than personal income taxes. A corporation is an ideal choice for higher-risk businesses that plan to go public or someday sell the business.
Guiding Your Business Every Step Of The Way
We are skilled business lawyers who understand how complex business law can be. Our goal is to help make the process of establishing a new business as stress-free as possible for our clients. We represent businesses at any phase in their life cycle, and we’re ready to help you get your business off the ground by finding the right business formation.
Call 470-863-3824 today to get started, or send an email through the online form. We represent clients throughout Woodstock and the surrounding area of Georgia.