Philadelphia Business Start Up Attorneys
During the process of business formation, you may need legal assistance choosing your business entity. There are many financial advantages or disadvantages to these business entities, so it is helpful to consult with an experienced business law attorney before you make your decision.
At Kenneth L. Baritz & Associates, P.C., we assist you in determining which business entity or entities work best for your business goals. We have more than 30 years of experience handling business formation and business law cases. We can make your business formation successful.
For most small businesses, it makes sense to form partnerships or sole proprietorships. For partnerships, there are two or more owners of the business and they all share in the business profits or losses. For sole proprietorships, there is one business owner. These types of business entities are typically favored over corporations because of their tax advantages.
The disadvantage to these types of business entities is that they leave the owners open to unlimited liability. A limited partnership or limited liability partnership can help curb the amount of liability that a partner would have in the business. His or her liability is determined by the amount of their business investment.
Limited Liability Company (LLC)
The limited liability company is a blend of a partnership and a corporation. The members of the company have the option of deciding how it is governed. How the government taxes these companies can vary widely depending on the number of members or how they would like to be taxed.
The owners of an LLC are called members. Members enjoy the same shield from personal liability as they would in a corporation while maintaining the tax benefits of a partnership.
Most people, when forming a business, opt for one of the business entities that creates a corporation. Corporations may be taxed more because they are recognized as a separate legal entity. However, because of this distinction, they enjoy certain liability restrictions. There are three main types of corporations:
- The S corporation, also known as a close corporation, has a limited amount of taxes that it owes. These types of corporations do not pay any income taxes, but have strict requirements to qualify for this status.
- The C corporation varies from the S corporation in that it is taxed under different regulations than the S corporation. Most companies are classified as C corporations because they don’t meet the strict S corporation guidelines.
- The nonprofit does not distribute any profits to its shareholders, but uses them to pursue their charitable goals. Nonprofit corporations are generally exempt from federal income taxes.
The business lawyers at Kenneth L. Baritz & Associates, P.C., make sure that you have the information you need about your business formation plans. They help you look toward the future and make plans today to help you achieve those future goals. Contact us for more information on business entities.