Formation of Entities in Oakland County
Common Types of Business Structures
Choosing the best entity for your business can be a challenge. When you are creating a new business it is important to set it up properly for a variety of reasons, including protecting your personal assets through limiting liability, having the ability to file taxes with your own, and being able to run the business with multiple owners. Each structure offers distinct benefits and disadvantages that an Oakland County business attorney from
The Law Offices of Stuart Lee Sherman, PC can discuss with you and your partners.
Partnerships have multiple owners who contribute to the business and share the profits. The structure is fairly easy to create and allows you to combine the contributions of multiple individuals. All owners must share equally in the profits, however, and some owners may feel as though they are putting in more effort than others, so you should carefully consider this entity before creating it. Another disadvantage of partnerships is that they leave the owners liable for their own actions as well as the actions of the other partners.
Corporations or C Corporations, which are owned by shareholders, are legally liable for the business's debts, losses and other expenses. These costly and time-consuming ventures are primarily for larger companies with numerous employees. They offer a wide array of benefits, including limited liability for shareholders and the ability to receive certain business profits at a tax rate that is lower than a personal income tax rate.
Despite the stricter requirements and the necessity of shareholder compensation, creating an S Corporation may be in your best interest. This type of entity differs from a C Corp because it allows you to pass the profits and losses through your personal tax returns. What this means for you is that your business will not be taxed; only the shareholders will be. If a shareholder works for the company, however, he or she must be paid fair market value for his or her services.
Limited Liability Companies
As the name implies, LLCs offer protection to members' personal assets from debt and lawsuits. It also requires less recordkeeping and, unlike a partnership, allows members to share profits unevenly. LLCs do only offer limited protection for personal assets, which may still be subject to claims of wrongful acts. Additionally, these entities are subject to self-employment taxes.
Enlist the Services of an Oakland County Business Lawyer
If you are starting a new business, choosing the legal structure is one of first major steps. Attorney Stuart Lee Sherman has more than 20 years of experience in business planning and tax planning and is prepared to assist you in forming your business. In addition to his Juris Doctorate, Mr. Sherman earned his LL.M. in taxation from New York University. He creates effective structures for his clients by listening to their needs, assessing the problem, exploring their options and executing the best solution.
You can learn more about your legal options today by taking advantage of our free case evaluation. After you have selected an entity for your business, our firm can continue to assist you in growing your business through
general business advising. For more information about our client-centered services,
contact The Law Offices of Stuart Lee Sherman, PC today!