Unemployment remains high in certain parts of the country and, as a result, many are choosing to open their own business. A great deal is involved when taking this step and one of the first decisions which must be made is to determine which type of ownership structure is best for you. A business law lawyer in Bethlehem can be of great assistance in helping you choose the right structure as it depends on many factors. Factors to be considered include the potential liabilities and risks of the business, the income tax situation, what is needed in terms of the expenses and formalities in setting up and maintaining the business structure and investment needs.
The business lawyer looks at the products and/or services provided by the business when determining which business structure is most appropriate. For those businesses involved in high risk activities, such as stock trading, a limited liability company is often the best choice. This shields the personal assets of the owners from business claims and debts. A corporation may also be appropriate here. The lawyer considers all options which determining which is right for your business.
Businesses set up as sole proprietorships, partnerships or LLCs all pay taxes the same way. The owners report profits and losses on personal income tax returns. Having an unincorporated business means the owner pays income taxes on all business net profits. How much the owner takes out of the business doesn’t play a role in this. In contrast, corporation owners don’t report shares of corporate profits on personal tax returns. Only salaries, dividends and bonuses are taxed in this situation. The business lawyer considers the above when determining which business structure to use.
Sole proprietorships and partnerships are easy to establish, but corporations and LLCs require more paperwork and fees be paid to the state. Officers must be elected also. The lawyer takes this into consideration when determining which business structure will work best for you.
Finally, investment needs of the company are considered. A corporation may sell ownership shares through stock offerings. Companies that don’t expect to go public often don’t need to form a corporation as it does cost more. The business law lawyer in Bethlehem explains the different types and the advantages and disadvantages of each. Having legal representation ensures the right choice is made from day one.
