America is the entrepreneurial capital of the world, yet most people aren't aware of the intricacies of starting a business. One of the most important issues in planning your business is determining how your business will be legally structured.
Businesses can be established in a myriad of ways. The simplest form of business is a sole proprietorship which is commonly referred to as a DBA or "doing business as." When you register a DBA you are formally announcing that you are personally conducting a business under an alternative name. This allows you to open a bank account, advertise and operate you own business under another name. The disadvantage to using a DBA is that you are solely liable for the problems that may occur in your business and can be sued personally. This business model may not be the best way to protect your business for your successors because it exposes you and your business to huge personal and business liabilities.
Another way to set up a business for succession is to set up a general partnership. A general partnership agreement may seem like a good way to include the future successor of your business because it allows you to engage in business together and establish a practical and planned working relationship. The disadvantage to this scenario is that partners share in the liability and losses of the business, so there is no way to protect your successor from business liabilities and lawsuits. However, there are ways to set up your business that will protect both you and your future business successors.
Many people set up limited liability partnerships (LLPs) or limited liability companies (LLCs). Limited liability partnerships operate similarly to general partnerships except one partner is generally not liable for the negligence of the other partner. Another advantage of structuring an LLP is that income taxes are passed through the business to the partner's individual income tax return. Similarly, a limited liability company has advantages because it combines the positive aspects of corporate liability protection and has the similar tax advantages of the LLP.
Generally, the best way to protect your business for your successors would be to set up a corporation. A corporation is registered with the state as a separate entity from the owner. This separation provides the business owner protection from liability incurred by the business so you and your successor will not be sued personally. Every state has different corporate benefits and entitlements. Whatever way you decide to set up your business, make sure to consult a business attorney who will provide you with accurate and current information on the corporate laws of your state.
For more information on successful Florida estate planning and asset protection techniques, please contact the South Florida law firm of Wild Felice & Pardo, P.A. at 954-944-2855 or via email at info@wfplaw.com to schedule your free consultation. Let us protect what you value most.
Businesses can be established in a myriad of ways. The simplest form of business is a sole proprietorship which is commonly referred to as a DBA or "doing business as." When you register a DBA you are formally announcing that you are personally conducting a business under an alternative name. This allows you to open a bank account, advertise and operate you own business under another name. The disadvantage to using a DBA is that you are solely liable for the problems that may occur in your business and can be sued personally. This business model may not be the best way to protect your business for your successors because it exposes you and your business to huge personal and business liabilities.
Another way to set up a business for succession is to set up a general partnership. A general partnership agreement may seem like a good way to include the future successor of your business because it allows you to engage in business together and establish a practical and planned working relationship. The disadvantage to this scenario is that partners share in the liability and losses of the business, so there is no way to protect your successor from business liabilities and lawsuits. However, there are ways to set up your business that will protect both you and your future business successors.
Many people set up limited liability partnerships (LLPs) or limited liability companies (LLCs). Limited liability partnerships operate similarly to general partnerships except one partner is generally not liable for the negligence of the other partner. Another advantage of structuring an LLP is that income taxes are passed through the business to the partner's individual income tax return. Similarly, a limited liability company has advantages because it combines the positive aspects of corporate liability protection and has the similar tax advantages of the LLP.
Generally, the best way to protect your business for your successors would be to set up a corporation. A corporation is registered with the state as a separate entity from the owner. This separation provides the business owner protection from liability incurred by the business so you and your successor will not be sued personally. Every state has different corporate benefits and entitlements. Whatever way you decide to set up your business, make sure to consult a business attorney who will provide you with accurate and current information on the corporate laws of your state.
For more information on successful Florida estate planning and asset protection techniques, please contact the South Florida law firm of Wild Felice & Pardo, P.A. at 954-944-2855 or via email at info@wfplaw.com to schedule your free consultation. Let us protect what you value most.
No comments:
Post a Comment