When preparing to start a new business, consulting with an experienced business law attorney can offer exceptional insight into which type of business formation would most benefit you.
There are four main types of business formations, each with a differing purpose. An informative article specifies each in greater detail, along with advantages and disadvantages of each. They include sole proprietorship, limited liability corporation (LLC), partnership, and corporation. While some business formations will require filing of articles of incorporation and a certificate of formation with the state in which the business will operate, others do not require any formal filings. There are fees, both local and state, required for the formations which do require filings. Each state maintains a separate fee schedule, and a party can contact his or her local probate office to inquire an amount.
Before deciding on a formation, a business owner should also work with an attorney or consultant to draft a viable business plan. This will be instrumental in the best legal business set-up going forward.
The way in which a business is formed to operate will determine the amount of taxes the business will pay. In addition, it will determine if a tax return separate from an individual return must be filed for the business. Forming a new business without knowledge of current tax rules and regulations can prove detrimental when the time to file arrives. This is one reason a business attorney is a most vital asset to any new, or existing, business. He or she can offer knowledge that will prevent unnecessary costs in the future.