It’s one of the American dreams. Owning your own business. You have put in the time to think about what you want to do and how you are going to put your plan in action, but equally important will be what kind of entity to choose for your business.
The type of entity you choose is like deciding on the right vehicle to get a job done. You want to pick the right one for the road ahead. Talking to a skilled business law attorney about your options can help you make the decision that is best for your new or changing business.
At 4Sight Legal Services, PLLC, we work closely with our business clients to better understand the unique issues they are facing. We embrace collaboration by connecting with our clients’ trusted advisers, including CPAs and financial planners. This approach helps to ensure that all of your advisers are operating on the same page.
DECIDING ON THE RIGHT ENTITY FOR YOUR BUSINESS
There are several different types of business entities in Tennessee, but they all have various functions and benefits. We can help you learn more about the kinds of entities that are available and what the best fit is for your business.
Some of the most common business entities include:
- Limited Liability Corporation (LLC): An LLC is a separate entity from its owners. If properly established and maintained, the owners of an LLC can be shielded from liability and can have the tax benefits of a partnership or sole proprietorship. An LLC also does not have the same director meeting and shareholder requirements of a corporation.
- Limited Liability Partnership (LLP): An LLP, like an LLC, is like a combination of a partnership and a corporation. It offers some of the same protections of a corporation without all of the same requirements. The most significant difference is when it comes to income tax time. In an LLP, all the profits and losses pass through to the partners.
- Sole proprietorship: A sole proprietorship can be owned by an individual or a married couple and offers the greatest flexibility and fewer taxes. The biggest issue, however, is that the owner is personally liable for all debts.
- General partnership: Two or more partners can form a general partnership. Similar to a sole proprietorship, all partners are liable for any debts of the partnership, but in this case, there can be more than one partner without it being a married couple.
- Corporation: A corporation is a more complex structure. While it is helpful that the owners have some protection from the potential debts and losses of the company, there are a lot of rules and regulations for what the government requires from a corporation. A corporation may create significant tax advantages for its owners
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Headquartered in Chattanooga, our estate planning firm represents clients throughout Tennessee. Learn more about our Business Law and Estate Planning services by scheduling a consultation today. Please call 423-305-1704 or complete our online contact form.