Business formation can be a thrilling process for entrepreneurs and others. However, it is important to carefully consider the advantages and disadvantages of the different forms that you can choose for your business. Business forms include a sole proprietorship, a corporation, a professional corporation, a general partnership, a limited partnership, a limited liability partnership, a limited liability company, and a professional limited liability company. Based in Kingston, Plymouth County business formation lawyer Michael S. Mehrmann has counseled businesses on the South Shore at all stages of their operations for more than 30 years. He can give you a strong understanding of which business forms may be right for you and draft the formation documents that are necessary. If a dispute should arise, he can help you navigate through it as well.Understanding the Importance of Choosing Your Business Form
The business structure that you choose will influence many aspects of your business, including daily operations, taxes, your ability to raise money, and how much you put your personal assets at risk. Business owners need to choose structures that provide an optimal balance of protection and benefits. The form needs to be chosen prior to registering the business with the state and federal government, and before filing for licenses or permits. It also should be chosen before entering into any contracts.
Sole proprietorships are the easiest to form. A single owner who wants complete control of the business and does not want to register or maintain separate business assets and liabilities may prefer this form. It can be more difficult to obtain a loan as a sole proprietor, and you cannot sell stock. However, this may be a good choice for business owners who want to test out ideas before putting together a larger business. It can also be a good choice for people who do not want to hire many employees but want to keep an operation small or more limited.
Partnerships are simple structures that allow two or more people to own a business together. There are different types of partnerships. In a limited partnership, one general partner has unlimited liability, while the other partners possess limited liability. Profits pass through to personal tax returns. The general partner pays self-employment taxes. In a limited liability partnership (LLP), each owner has limited liability, and each partner is protected from debts against the partnership. It can be important for partners to discuss in detail how they will operate the business together and how they will resolve disputes that arise. These discussions should be incorporated into a partnership agreement. A business formation attorney in Plymouth County can help you draft this agreement.
A limited liability company (LLC) protects owners from personal liability and can be a useful structure for medium- or sometimes high-risk businesses. There is more flexibility in how profits are distributed, particularly when compared to a partnership. The form does not require formal minutes or resolutions, making it slightly more informal than a corporation. However, there is more complexity and paperwork than there would be for a sole proprietor. If the LLC goes bankrupt or gets involved in a lawsuit, you are not personally liable in most cases. However, profits and losses are passed through to your personal income, and you are considered self-employed, which means that you need to pay self-employment tax contributions to Medicare and Social Security. People providing professional services, such as psychologists, engineers, public accountants, dentists, vets, and attorneys, may choose to form a professional limited liability company.
Corporations are legal entities created to be separate from their individual owners or shareholders. They provide the most protection to owners from personal liability. They also have an easier time raising capital because they can raise funds by selling stock. However, it can be expensive to form a corporation, and over time they require substantial investments of time to keep records, to provide reporting, and to operate. They are generally a good choice for businesses that plan to go public or eventually be sold.
Different initial steps must be taken depending on the business form that you choose. For example, in Massachusetts, in addition to choosing a name, people forming a corporation will also need to prepare and file articles of incorporation, set up a corporate records book, prepare corporate bylaws, appoint corporate directors, hold a board of directors meeting, issue stock, and file an annual report. We understand all of the different forms and can work closely with you so that you can get your business off to a good start with the proper documentation, permits, and registrations. In most cases, contracts and buy-sell agreements can also be negotiated and drafted once a business is legally formed.Consult a Sophisticated Business Formation Lawyer in Plymouth County
You can obtain knowledgeable legal advice and representation in connection with starting a business without hiring an in-house attorney. Our firm takes pride in providing superior legal services at a fair rate. Attorney Michael S. Mehrmann has the experience and skills to meet your specific needs. We represent people in Kingston, Plymouth, Marshfield, Hanson, Duxbury, Carver, and Pembroke, among other communities. Call us at (781) 585-3911 or use our online form to set up an appointment with a Plymouth County business formation attorney.