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Forming and managing your business can be overwhelming. Whether you are starting a business on your own or with other owners, it is important to determine which business entity will work for all the owners currently, as well as in the future. Small Business owners need to keep their eye on costs while making strategic decisions to improve and grow their business.
Recovering from the mess created by DIY legal agreements can be very costly, and legalese can be challenging to understand. If you are forming a business and need filing assistance, require organization documents to be drafted, or are unsure which business structure best suits your individual needs, please contact Cohoon Legal for guidance. Managing your risk with legal counsel’s advice is the best approach to avoid making common mistakes that lead to fines, loss in revenue, and lawsuits. BUSINESS FORMATION Deciding the entity in which to form is a crucial decision for new business owners. A new business that only has the Certification of Formation from the Texas Secretary of State and does not have an Operating Agreement or By-laws risks being sued for their personal assets. It is important for business owners to understand their foundational documents. At Cohoon Legal, I pride myself on a thorough explanation of your organizational documents and giving you the tools to manage your business effectively. The right-sized business formation for you depends on many factors and should be customized with your goals in mind. There are unique legal and tax consequences for each type of business entity. Let Cohoon Legal guide you to make a sound decision that incorporates the best strategy for your growth, assets, risk, tax profile, profit sharing, and operations. This step is just the beginning of your business life-cycle and our attorney-client relationship. LIMITED LIABILITY COMPANY (LLC and PLLC)
A Limited Liability Company (LLC) is the most common small business entity structure that combines the protection of a corporation but with more flexibility and without the formality of a C Corp (INC). The LLC members are protected from the liability of the business debts, agreements, and lawsuits. SERIES LIMITED LIABILITY COMPANY
This is a Limited Liability Company with a series of assets that all maintain separate liability from each other and the primary parent LLC. This type of entity is ideal for real estate investors, individuals, or companies with considerable assets to keep separate for liability purposes. CORPORATION (INC or PC)
A C-Corporation (INC) limits personal liability for business debts, agreements, and lawsuits if you follow the rules for running a corporation. A C-Corporation may be a good option if you seek to go public, get venture capital, or take on equity investors. S-CORPORATION
An S-Corp is a corporation elected to be taxed as a flow-through entity, similar to an LLC or Limited Partnership (LP). It is often the right choice for businesses without high start-up costs or major equipment and will make a sizable amount of money without a great deal of effort and expense. SOLE PROPRIETORSHIPS AND LIMITED PARTNERSHIPS (LP)
In a sole proprietorship or LP, the business owner(s) remains personally liable for business debts, agreements, and lawsuits. NOT FOR PROFIT
Most nonprofit companies are formed to benefit the public, as opposed to clubs, cooperatives, and other organizations created to benefit their members. They include companies formed for charitable, educational, scientific, religious, and literary purposes. These charitable companies are also referred to as 501(c)(3) organizations, after the Internal Revenue Code section that provides them with an exemption from taxation. |
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