A Brief Overview of Business Entity Formation
When just starting out, many small businesses are more like part time occupations. At first, most of these ventures are not profitable. Over time, however, a small business may grow and become a profit generating business that an entrepreneur may concentrate on exclusively. For many business owners, the question soon becomes how they can protect the business assets that they have gained as their business has grown. The best way to protect business assets is to form a business entity.
The sole proprietor of a business is subject to liability that is basically unlimited. For many of you, the term ‘unlimited liability’ probably requires some further explanation. Basically, unlimited liability means if your business fails, you stand to lose quite a bit more than your business assets. This can include personal property, like your home or other valuable property in some states. It is for this reason that business entity formation is so important.
Once you have come to the decision to form a business entity, you will then need to figure out what kind of business entity that you would like to form. A number of different business entities are available, each of which will protect a proprietors assets in a number of different business situations. Included among these business entities are corporations, limited partnerships (LPs), limited liability partnerships (LLPs) or limited liability companies (LLCs). Through business entity formation, a sole proprietor may reap a number of important advantages.
A 10-Point Plan for Resources (Without Being Overwhelmed)
Limited liability companies, or LLCs, are the most common type of business entities formed today. LLCs are the perfect solution for a small business because they are structured like partnerships, while offering protections that are close to those of a corporation. The process of getting an LLC consists primarily of applying for it through your state comptroller’s office. Once the application process is complete, you will end up receiving a state tax ID number from your state’s comptroller office.
A Simple Plan: Resources
When you are the sole proprietor of a small business, or you have gone into business with a partner, you should certainly speak to a business attorney to find out more about forming a legitimate business entity. Discussing your situation with a business lawyer is sure to help you figure out the best way to protect all of your business and personal assets.
Laws governing business liability and business entity formation differ from state to state, so it is essential that you find a business attorney in your city to help you do what is best for your business and personal interests. All you need to do to get started is perform a search using your preferred search engine for business entity formation or a business attorney working in your area.