First off, congratulations! Starting your own company is a big deal and one that deserves the utmost care and attention. That said, one of the first details requiring attending is choosing the type of entity you would like your business to operate as. As the top business planning lawyer in NH, our team at Feniger and Uliasz understands how what may seem a simple task can be overwhelming.
Here, we are looking at the three most common business entities. What they mean, and why you may select to operate as a particular one over another.
Possibly one of the least complicated entities is the sole proprietorship. As the name suggests, this type of company is owned by a single individual. While no formal action is required to establish a sole proprietorship, there are several steps to ensure you are legally operating should your profits call for tax filings.
A few advantages of establishing a sole proprietorship include complete control/ownership of the company, a much easier tax filing process, and minimal cost to obtaining the necessary documentation and permits you may need to operate. However, there are a few disadvantages as well. Those include complete control/ownership of the company, full liability, and the sometimes grueling hours required to establish the business.
Limited Liability Company
Next in line is the LLC, or limited liability company. Providing significant legal advantages over a sole proprietorship, an LLC help to protect assets from creditors and legal liabilities. Unlike a sole proprietorship, an LLC operates under a separate tax identification number and is ‘owned’ by members of the company. Thus, the members of an LLC are less (if at all) liable for financial debts or legal issues than a sole proprietor.
Of the three examples, establishing a corporation is the most entailed. In general, there are two types of corporations – an S Corp and a C Corp. The main difference between the two falls within how the government taxes the company. In a C corp, the business and the owners are taxed separately. In an S corp, the shareholders are individually taxed based on their shares.
There are several requirements to become a corporation and many forms to be filled out. However, if it is deemed that a corporation is the best route for your company, it also provides some of the best benefits.
Depending on numerous factors, choosing the best type of entity for your start-up company can be overwhelming. With the help of an experienced business planning lawyer in NH, like our team at Feniger and Uliasz, you can have peace of mind that you are making the best choice.
For more information or to schedule your consultation with our team, please get in touch with the office of Feniger and Uliasz today by calling (603) 627-5997. We look forward to assisting with your business journey!