Whether you’re starting or have been in business for some time and need to restructure, one of the keys to positioning your business for success is the legal structure you choose.
The legal structure you choose, whether as a sole-proprietorship, DBA, LLC, or incorporating, has various benefits and limitations. Setting up your business structure is crucial and can take time and energy that drains in-house legal away from other projects.
To gain the types of advantages you want for your business during tax season and protect it from liabilities, it may be a good idea to hire outside legal help from a secondment law firm.
In other words, having an outside attorney is one of the smartest moves you can make when you’re in business.
From guiding your business structure and operations to protecting you from various liabilities and providing counsel for acquisitions and sales, an outside attorney is a resource that you should consider.
As you factor in all the costs associated with your business operations, they may include rent, inventory, labor, and other expenses, but one that is often overlooked until it is the most needed is more attorney services.
That said, attorneys can be expensive.
But there are alternatives to expanding in-house legal representatives. For example, you can hire a firm on retainer or research a secondment law firm designed to represent and guide you on an as-needed basis while augmenting your in-house legal team.
There are some significant steps you need to undertake before starting your business, from choosing a business idea, selecting the legal entity for your business operations, choosing and filing a business name, registering your business, applying for permits and licensing, establishing a business location, and finally, registering and reporting taxes.
The type of legal entity you choose for your business is one of the more critical elements in running your business successfully.
The Various Legal Entities For Your Business
In a nutshell, the type of legal entity you choose for your organization should be based on the type that offers the best protection for your business, assists you with taxation, and requires the least amount of hands-on management.
In general, there are four business structures for you to consider, the Sole Proprietorship, a Partnership, the Limited Liability Company, and the Corporation. Good attorney services will educate and guide you through each of these four and help you determine the best route to go initially.
There are variations of each of these structures that may offer more or less protection for your organization.
As your business grows or contracts, you may reconsider the type of structure you run, and again, good attorney services will help guide these decisions.
Sole Proprietorship: A sole proprietorship is entirely owned by one person without separating the owner and the business. The legal ramifications of this type of legal arrangement can be complex in situations where debts or liabilities come into play.
Partnership: There are different forms of a partnership, but in general, a partnership is where parties agree to cooperate in advance of mutual interests. These partnerships can take various forms and include individuals, organizations, businesses, and other interests that agree to work together.
Limited Liability Company: A limited liability company is a mixture of a sole proprietorship, partnership, and corporation that is recognized in the United States. The benefit of an LLC is that the tax structure may simulate a sole proprietorship with the liability protection offered by a corporation.
Corporation: A corporation is an organization formed by a collection of persons or companies authorized to act as a single entity shielding liability from the individuals that make up the corporation.
Regardless of the type of organizational structure you decide for your business, the key is to make an informed decision guided by sound, educated advice.
Selecting an in-house attorney or choosing an out-of-house attorney service to augment your legal team will help your business avoid costly mistakes that could jeopardize your business and possibly place you in avoidable legal jeopardy.
Avoid these potential issues by hiring an attorney beforehand to guide you in your decision-making process and position your business for the best opportunity to grow and succeed.
Protecting your interests, business, employees, and customers are essential when starting or restructuring your business as the type of business you choose to operate. Selecting an attorney that can help you as needed is an excellent suggestion for small businesses that don’t have the funds to retain in-house counsel.