Aspiring business owners must understand different business structures before choosing one. They must consult with experts who will know which type of business will better suit their needs and will give them more flexibility in tax and in company responsibilities.
What are the forms of business structures?
Basically, there are five business structures that can be considered when starting a business; sole proprietorship, partnership, limited liability company (LLC), S corporation, and C corporation.
Sole proprietorship is a business structure wherein the owner alone doesn't have a limited liability status and has to shoulder all the legal responsibilities of the business.
Business partnerships are preferred by some as they have more freedom to share tasks and responsibilities with their partners and they have higher chances of incurring profits.
The Limited Liability Company, or LLC, is a form of business structure that has liability protection as that of a corporation and has several features of a business partnership as the company's gains and losses are shared by individual members.
S Corporation, or the Small Business Corporation, allows the company's taxes to be considered as a sole proprietor or a partnership and not as corporate tax structure.
Lastly, C Corporation is more complicated and has more complex business structure compared to Limited Liability Company but it has tax benefits that can be enjoyed by the business.
Aside from other factors, business owners must consider their time and funds that will be allotted to the foundation of the company before choosing the form of their business structure. This way, they can strategically avoid losses and better run the business.
What are the common legal problems?
Business owners must be trained to handle disputes so that they won't jeopardize the company's stability by going to courts and filing lawsuits. This can be avoided with the help of experts who can guide partners in agreements regarding their responsibilities and contributions on the company.
This way, there will be smoother transactions that will be to the convenience of everyone involved.
Who can help business owners?
Choosing a business structure will surely have an implication on the owner's liability, his tax flexibility, and the ability to accumulate funds.
For a better understanding, consult with a Los Angeles business lawyer who can accommodate the owner's queries and determine which business structure should be chosen. Aside from this, these business experts can also supervise the drafting of agreements to be signed by partners and shareholders. This way, the owner will be assured that he is not violating any business law.