Your choice of business entity can be crucial for the future success of your company. It is not a choice that should be taken lightly. Your choice of business entity could dictate your personal liability and tax status. You must take the time to make the right choice.
First, you should sit down with an experienced business attorney who will review your situation and explain your options. Your lawyer could ask you the following questions:
- How much flexibility do you want and need when running your business?
- Who will be the owners of the business?
- Do you have personal assets that you need to protect from your business liability?
- How do you envision your day-to-day operations?
Then, your attorney would help you review your tax status and the potential implications of your choice of business entity. For example, you could be subject to double taxation if you do not make a choice that allows for pass-through treatment.
Your attorney would help you with the necessary paperwork to begin your business. For example, if you are forming an LLC, you would need an operating agreement between the members. If you plan on issuing stock to investors, you would need a shareholder agreement that would protect their rights. Corporations would need bylaws that would state how they are to be run. Corporate documents are very consequential because courts would look to them when there are disputes. They must be executed correctly. You should seek counsel from a business law attorney when you are beginning a company.
The attorneys at Bountiful Law work with small businesses during the formation stage to ensure that the process is smooth and done correctly. You can reach an attorney by messaging us online or by calling us today at 425.517.1653.