When starting a business, many new business decisions need to be considered:  who to hire, where to locate, how to get customers and where to start. However, one of the most important and overlooked decisions is how to set up your Triangle business in a way to best protect it.Business Formation

Going into business involves risk, but certain risks can be avoided or, at least, minimized. One of the easiest ways to protect the business is setting it up under the best legal entity for you. I regularly explain to local small businesses owners, as the owner of Thornton Law Firm, various options. I want to share that information with you, too!

4 of the most common choices of types of business entities that business owners consider when forming a business are:

  • Sole Proprietorship: This option offers no protection to the owner but is the simplest to set up. No papers need to be filed – you simply start doing business. This type of formation is best for businesses with minimal risk.
  • Limited Liability Company: These entities require minimal paperwork and are particularly easy to set up. Its biggest advantage is that it helps provide protection for your personal assets if there are lawsuits against your business.
  • Limited Liability Partnership: At least one general partner and one limited partner is required for this option. Documentation must be filed with this type of entity as well. The general partner runs and manages the business and remains personally liable. The limited partner is simply the financier and cannot participate in daily management.  While partnership structures are not as widely used nowadays, there are limited circumstances in which they are useful.
  • Corporations: For this formation, shareholders own the business, elect a board of directors who oversee the long-term objectives.  The directors further appoint officers who run the daily business.

It is important to discuss business needs with an attorney before selecting a formation.  There is no best business entity for all situations.  Call me at Thornton Law Firm today to discuss your business situation.