Local Business Partners

BUSINESS FORMATION

Partnership Agreement

To have a successful partnership, you should have a well-drafted partnership agreement.  A partnership agreement will set forth the essential terms and outline each partners' rights, responsibilities, and liabilities.  It will also help resolve disputes that would otherwise result in litigation between the partners.

Limited Liability Corporation

(LLC)

An LLC is a type of legal entity that can be formed to own and operate a business.  An LLC owner(s) have limited liability meaning the owner(s) are generally not personally liable for any debts incurred by your LLC business or most business-related lawsuits. LLCs offer pass-through taxation where the profits or losses pass through the business to the owner's personal tax return. Unlike a corporation, it is not necessary to have officers and directors, board or shareholder meetings, or the other administrative burdens that come with having a corporation.

The articles of incorporation creating an LLC must be filed with the state.

Corporations

(S-corp and C-corp)

Corporatations offer the corporate veil which offers protections to shareholders from being personally liable for business liabilities.

S-Corporations are better for smaller corporations (1 to 100 shareholders).  Owners hold common stock which also includes voting rights.  The corporation is taxed where only shareholders pay on profits they received.

C-Corporations are best if there are plans to go public one day.  Shares may be issued to founders, employees, and investors.  Preferred stock is held by owners.  The corporation is taxed twice - once when the business pays and once shareholders receive income.