A Brief Introduction to Business Entities
If you are starting a new business, one of the first decisions you need to make is what kind of structure it will have. There are four basic kinds of business entity, each with its own level of liability, tax regulations, and chain of command. For the best chance of future success, you need to research your options and choose the best plan for your circumstances.
As you are forming and later operating your new company, the assistance of a qualified lawyer can be an invaluable asset. He or she can help you understand complex business laws, meet regulations, and settle any disputes that may arise. Call Des Moines business startup attorneys LaMarca Law Group, P.C. at (877) 327-2600.
There are many different kinds of businesses; the most common are:
Sole Proprietorship/Partnership: You and your business partners, if you have any, will be in charge of the business – and fully responsible for it. You will need to pay income taxes on the company’s profits, and if there is a lawsuit against your company, the damages may come out of your personal assets. The benefits of this arrangement are that it can be arranged easily, with no legal fees.
Limited Liability Company: An LLC is a separate legal entity from its owners. Any lawsuits filed against it will not be targeting you personally, making your personal assets safe. It is run according to a managing agreement signed by its founders, which is a little like a constitution for your business.
C Corporation: A corporation is legally treated the same as an individual person. If a lawsuit is filed against one, its owners’ personal belongings will not be used to pay damages. It is taxed on its profits and shareholder dividends. A C corporation can be owned by an unlimited number of shareholders who will elect a Board of Directors to run the business.
S Corporation: An S Corporation shares many properties with C Corporations. Once difference is that there is a limit on the number of potential shareholders, and they must be US citizens. They are also only taxed on their shareholder dividends; the company’s profits are listed on the owners’ private tax returns.
Contact a Des Moines Business Entity Attorney
This article is only meant to provide a basic overview of potential business entities. For in-depth information about each kind, as well as valuable advice about the best structure for your business, contact the Des Moines business lawyers of LaMarca Law Group, P.C. at (877) 327-2600.