Long before your business comes to fruition, a great deal of planning and foresight is required. In addition to creating a general vision for your endeavor and attempting to innovate with respect to a given market and industry, you also have to think through the policies, procedures and practices that will come to typify the way you do business. But beyond the substantial questions associated with who you are and what you do, there are also vital considerations associated with more structural implications like tax liability and your responsibilities as an owner or partner. Put simply, the kind of entity you wish to form must be an essential priority.
Given the legal nature of these implications, you may wish to consult with an attorney immediately. By doing so in advance, you may spare yourself the eventual cost and frustration associated with potentially winding up on the wrong side of the law. Averting penalties and other legal consequences will assure that your company can focus on what it does best, for other business or consumers alike.
If you are looking to begin a new business, you should briefly familiarize yourself with the various options before speaking with an attorney about what makes the most sense.
Business Entities And What They Mean
As most savvy entrepreneurs know, not all business entities are the same. While the differences don’t always create a significant impact on your daily routines, they may still be important with respect to your bottom line.
There are several options in Alabama. Once you have a clear sense of your business identity, those options include C Corporations, S Corporations, non-profit corporations, sole proprietorships, limited liability companies (LLCs), partnerships, limited liability partnerships (LLPs), limited partnerships (LPs) and limited liability limited partnerships. At first glance, the differences may seem insignificant. Over time, however, implications for your finances and responsibilities may become far more pronounced.
Corporate formation, often ideal for larger companies with greater resources and multiple employees, is an optimal mechanism for those looking to limit personal liability and rather allow that ownership adopt the form of shareholders. As consequence of this arrangement, however, tax structure may be a bit more complicated and require superior finance and accounting resources.
Sole proprietorships are the preferred form for any individual owner. This owner is then entitled to all profits associated with venture while incurring any liabilities, losses and debts associated with operation.
Partnerships of each kind entail at least two owners who enjoy shared ownership of an enterprise. In general, each partner makes certain kind of unique contributions that are in themselves commensurate with their entitlement to profits and responsibility for any debt or liability. The nature of their relationship between one and another depends upon the kind of partnership that has been adopted.
Obtaining Legal Assistance Regarding Entity Formation
Depending upon the nature of your expertise, understanding the distinctions and advantages associated with various business structures may come fairly easily. That said, a legal opinion regarding, for example, the nature of liabilities incurred may be quite valuable.
If you need assistance in regards to starting a business in Alabama, Cloud, Willis & Ellis can help. Contact us today for more information.