PFB Law, Professional Association - St. Paul Business Law And Estate Planning Lawyer" class="brand-image"/>
St. Paul: 651-968-1022
Toll Free: 866-561-3419
Practice Areas

Choosing the right legal structure matters in business

There are five kinds of businesses you may decide to open. The legal structures are partnerships, sole proprietorships, Limited Liability Companies, corporations and nonprofits. Depending on how many people you plan to work with, the goals of your company and the kinds of protections you want, one of these legal structures may be better for you than the others.

One of the most common kinds of businesses is a sole proprietorship. Why? It's easy to set up. Sole proprietorships have only one person in the business -- you. If you have a business you run on your own, this is potentially a good legal setup for you.

Some states require sole proprietorships to register with them and to obtain a license. You may also need to obtain permits depending on the kind of business you want to run. Remember that this kind of business does not protect you from liability. If you bring in a profit, that goes on your personal tax return. If you see losses, those are reported on your personal tax return as well.

If you are sued in a sole proprietorship, your personal assets are at risk. If you're worried about liability, then you may want to choose a different kind of legal set up for your business, like a Limited Liability Company, or LLC. In an LLC, the company is able to be sued, but your personal assets can be shielded from any legal actions.

Our website has more information about forming a business and the laws associated with business in your state. Setting up your business correctly can help prevent liability later.

No Comments

Leave a comment
Comment Information