- What's in a name?
- June 19, 2017 | Author: Jake Posey
- Law Firm: The Posey Law Firm, P.C. - Austin Office
Some of the most common forms of business entity choices include the LP/LLP; Corp or S- Corp; LLC; Partnership; Sole Proprietorship among others. There are advantages and disadvantages to each type of entity and the best choice for your business will depend on your own unique business operations.
Here are a few points about business entity types:
- LP/LLP: The LP/LLP is a limited liability partnership providing liability to limited partners only. The death of one partner dissolves the LLP. For tax purposes, this is a partnership status.
- Corp or S- Corp: With a Corp of S- Corp, you are separating the rights and liabilities of the owners and the business operations. This is beneficial to business owners who are seeking protection of personal assets.
- LLC: The limited liability company provides legal protection for the owner as he is not liable for the debts of the business unless fraudulent activity is involved. Profits and losses may be reported on an individual income tax return.
- Partnership: A partnership is a simpler choice when it comes to business entities in that is requires less time and paperwork for set-up; however, a disadvantage is that a partner can be held liable for financial obligations of the business.
- Sole Proprietorship: This is the most common form of business organization with complete control of operations given to the owner. The owner is also responsible for financial obligations of the business.
Any type of business entity you choose must comply with state and federal law. You can assess your individual circumstances and decide which choice makes the most sense for you. You will have many factors to keep in mind including liability, taxation and recordkeeping issues. One type of entity is not better than another--it just depends on your needs.
The Posey Law Firm, PC can help with legal services for your business including small business general counsel, contracts, labor/employment law, human resources, business entity choice and more. Contact us today to schedule a consultation. We proudly serve the Austin, TX area, offering a full range of legal and government relations services to our clients.