Starting your own business and becoming your own boss can be a dream come true for many people. Bringing your talent and creativity to fruition may allow you flexibility and financial security at the same time. As an Illinois business owner, you have several options regarding what type of company you would like to form. Important considerations include ownership, taxation, and management. Although you may have a vision of how you want your business to run, you may not be sure which business entity is the best choice. Before making this crucial decision, consult an experienced business attorney for advice on the best path for your business.
Running your own business offers many perks and can enhance your work-life balance. However, building a company from the ground up can be a daunting task, with many critical factors to consider before the doors can open for business. There are four main business entities that entrepreneurs may consider, as described below:
Sole Proprietorship: This type of entity has one owner who may choose to use his or her own name for the company. He or she is solely responsible for the management and daily operations of the business. One benefit of sole proprietorship is that any income generated is only taxed once.
Partnership: This formation model takes place when two or more individuals create an agreement in writing to operate a business together. With this entity, the responsibilities are shared, such as raising capital, deciding important matters, and managing day-to-day operations. However, if conflicts occur, unresolved issues may threaten the business’ future.
Corporation: Incorporating a business allows for the most flexible type of company. Being incorporated means a company has separate legal standing, which can protect owners if the company faces any type of lawsuit. S corporations (S-corp) are corporations that pass income, losses, deductions, and credits to their shareholders for federal tax purposes. A C corporation (C-corp) is a legal structure for a corporation in which the owners, or shareholders, are taxed separately from the entity.
Limited Liability Company (LLC): Similar to a corporation, an LLC can be owned by a variety of entities, including individuals, trusts, corporations, and other LLCs. One of the advantages of an LLC is that it can be taxed like a partnership.
Every type of business structure has its advantages and disadvantages, so it is essential that you are informed of your legal options to achieve your long-term goals. Attorney Richard J. Miller represents small- to mid-sized businesses in a variety of legal matters that may affect their company. With his prior experience and financial background, he understands how to resolve your legal concerns and protect your livelihood. At the reputable Miller Law Firm, P.C., our accomplished Schaumburg, IL business lawyers will help you determine what kind of business formation is appropriate for you. Call our office today at 847-995-1205 to schedule your free consultation.