Starting a business is not for everybody. For some people in Michigan, it may even feel like an impossible task, one wrought with responsibility, stress, complicated terminology. The seemingly complex process may even scare off those with unique and extraordinary ideas. With that said, like many things, starting a business is not as complicated as it first appears, especially when you have the right people on your side.
Or maybe you already have a business, and you are operating under a sole proprietorship. Perhaps your income has been steadily increasing, and you are thinking of expanding and moving to the next step. Maybe you believe incorporating the business is the best move for you.
Whatever your situation is, it is vital to understand how each business structure protects you before making any decisions. The three main structures are a sole proprietorship, limited liability company, and corporation. Each has its pros and cons, and each requires different levels of planning. If you are uncertain what is best for you, it may be a good idea to speak with a business and tax lawyer about your options. Whatever you do, don’t give up on your vision; seeking help first may eventually afford you a life you never thought imaginable.
- Sole Proprietorship: A sole proprietorship is an unincorporated business with only one owner who pays personal income tax on profits. As a sole proprietor, your personal assets often co-exist with your business assets. While this is the most accessible business type, as you hardly have to do anything, it does come with liabilities.
- Limited Liability Company: A limited liability company is structured to distinguish between company assets and liabilities. An LLC will let you protect your home, and other personal assets should your company face a lawsuit. In many cases, as your business grows, you will want to consider establishing an LLC.
- Corporation: This business structure will allow a business to sell stocks. The tax on a corporation is different from a partnership or limited liability company, and the reporting requirements become more complex. A corporation will also offer protection against personal liability.
Enlist the Help of a Qualified Attorney Today
The type of business structure you choose will significantly impact your business’s longevity and personal liability. The business lawyers at Neumann Law Group in Traverse City have years of experience working with small and large companies. We would be pleased to review your situation and help you decide which business structure is proper for you. We can also help you with the formation process.
Contact us today at our main offices in Grand Rapids to book a consultation. We look forward to hearing from you.
Neumann Law Group
250 Monroe Ave NW, #400
Grand Rapids, MI 49503
Phone: (616) 717-5666
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