Oak Brook Business Attorney for Starting a Business
Building and operating a successful business can be immensely satisfying, but it can also be a complicated endeavor, and as a business grows, the business law issues that may need to be addressed are likely to become more and more complex. By taking the right steps early on with a business attorney and completing the requirements for business formation, business owners can create a foundation for ongoing success.
At Motiva Business Law, we provide legal help to businesses of all sizes, assisting with contracts, buying and selling businesses, franchise review, and much more. Attorney Danya Shakfeh has more than 10 years of legal experience, and as a business owner herself, she understands the best ways to meet your needs and ensure that your company can be successful both now and in the years to come.
Choosing the Right Business Structure
In some cases, starting a business is as simple as beginning to offer goods or services in exchange for money. The simplest way to structure a business is known as a sole proprietorship. In these cases, all of the business’s assets will be owned by a single owner, and the owner will pay income taxes based on the business’s profits or losses. However, the owner will also be personally liable for any debts and other liabilities accrued by the business.
In many cases, it is advantageous for business owners to incorporate their business and establish a formal business structure. This can ensure that the owner is protected from personal liability for any of the company’s debts and lawsuits, and it can also provide some tax advantages. If a business has multiple owners, incorporation can allow partners to formalize their business relationship, create a partnership agreement or other contracts that specify their roles and responsibilities, and determine how to resolve business disputes that may arise in the future.
The choice of business entity will depend on the needs of the business. There are a variety of options available for corporate formation, including:
- Limited liability partnership (LLP) – If a business has multiple owners, this type of structure can ensure that all partners are protected from liability from the actions of other partners. LLPs are most suitable for professionals who may be subject to malpractice claims, such as doctors, lawyers, and accountants, as LLPs protect partners from other partners’ actions. However, under Illinois law, partners in LLPs maybe otherwise liable for personal debts not related to a partner’s individual actions.
- Corporation – Like LLCs, a corporation functions as a separate legal entity from its owners. Corporations provide owners, known as shareholders, with the highest level of protection against personal liability, and the corporation will be required to follow strict requirements for record-keeping and reporting. Shares of stock in the corporation may also be issued or sold to raise money. With a corporation, profits earned by the business are taxed at the corporate tax rate. In some cases, this may result in double taxation, since the corporation’s shareholders will also pay taxes on dividends they earn. Corporations can choose to avoid double taxation and opt for an S-corporation tax status.
- Limited liability company (LLC) – This type of structure is a hybrid between corporations and LLPs and provides a business owner with most protections from personal liability. As a default, LLCs function as a “pass-through entity,” meaning that the business’s profits and losses will be considered as part of the owner’s personal income, and income taxes will be applied to these earnings. However, the LLC owners, known as “members,” can choose to be taxed as an S-Corporation instead of a pass-through entity. The flexibility of the LLC structure makes them choices for many businesses.
Contact a Burr Ridge Corporate Formation Attorney
As you work to establish your business, you will want to make the right choices to ensure that your business can continue to be successful in the years to come. Motiva Business Law can help you understand your options when choosing a business entity and that you meet all your requirements for formally establishing your business structure and registering your business with the appropriate agencies. To learn more about how we can help you start your business successfully, contact us at 630-517-5529. We work with business owners in DuPage County, Cook County, and throughout the Chicago area, including Oak Brook, Elmhurst, Burr Ridge, Willowbrook, Hinsdale, Lombard, Villa Park, and Downers Grove.