Be A Legal Eagle
You’ll have to make a decision about the best legal structure for your new business. Wait, what does that mean?!? Mostly, the business legal lingo has to do with taxes. Make sure you understand the differences among types of business structures in terms of liability and tax consequences. When starting a new business, many entrepreneurs find it beneficial to consult an attorney or tax accountant prior to deciding. Here are some of the terms you should know before moving forward in your new business:
Sole Proprietorship: A one-person business that is not recognized as a legal entity separate from its owner. The owner is personally liable for all business debts and taxes.
Partnership: A business association of two or more people or organizations. Each partner shares control of the business, as well as the business’s profits and losses. All partners are jointly and independently liable for all business debts and taxes.
Corporation: A corporation is legally considered a “person.” In order to incorporate a business, papers must be filed with the state in which you wish to incorporate. You will be required to file articles of incorporation, and corporations are required to have bylaws.
Limited Liability Corporation (LLC): An LLC offers the same protection for debts as a corporation, but is taxed as if it were a partnership or sole proprietorship.