Business Formation Attorney Oklahoma City

What Business Formation Should I Choose?

There are many factors to consider when developing a business formation, including a legal structure for aspiring business owners. These include:

• Sole Proprietorship

• Limited Liability Company (LLC)

• Corporation

• Nonprofit

• Partnership

Sole Proprietorship

If you plan on investing in yourself and starting the business on your own, then proprietorship is the best choice for you. You are investing your own personal assets, taking care of the business startup costs, and handling all business disputes that, without a business attorney to help you navigate, can become overwhelmed by all of the legal issues involved with assuming the head role of an owner.

Some of the advantages of a sole proprietorship are:

• You have complete privacy in all of your dealings

• Single taxation as the owner and not the business

• As the proprietor, you can make important decisions quickly

• You alone get to take in the profits

• The potential to take on other viable business opportunities that are presented without needing to receive approval from other members

• Developing personal relationships with your business clients

Disadvantages include:

• Sole responsibility and limited liability partnership

• Untimely death will dissolve your business

• You take all of the risks

Partnership

If you and a couple of other individuals are looking to open a business, you may want to begin a partnership with these people depending on the number of people involved. Usually, these are businesses created by anywhere from two up to fifty people with no limitation on partners. Accountants, doctors, engineers, and even restauranteurs fall into this category. There are limited partnership agreements (which have limited partners) and unlimited liability partnerships in this case.

Limited liability partnerships the liability is (accountability & responsibility) are limited to the resources & assets that have been contributed by the partners who have created the business. Unlimited partnerships aren't just limited to the available resources but the personal assets of all of the partners. This could either make or break your business in the long run for a new company, so it's essential to have an excellent attorney-client relationship.

Pros:

• You can divide and conquer various tasks, improving productivity

• Profits and losses are all agreed upon between the partners

• There is more access to capital for the business

• The continuity of your business is guaranteed; death won't stop the company from functioning.

Cons:

• There ALWAYS has to be an agreement on major decisions that could slow down the business’s day-to-day operations.

• Unlimited liability will exist for all of the partners

• There is a potential for conflict of interest between the partners

• A limited partner will suffer from limited control of business decisions

Corporation

Corporations are a business entity formed as a legal entity by people who desire to own shares of a company; ownership is shown by the amount of stock someone owns in a corporation. This style of entity formation has no limits as to how many people can own stock in the corporation.

A corporation can choose to be either a liability or unlimited liability company. A limited liability company (or LLC) has capital limited to the amount of cash invested into the company’s shares (which also includes money raised by the shares of shareholders). That liability isn't carried by the members’ assets, thus absolving them from losing the proverbial shirt off of their back if the business fails.

Limited liability companies protect investors, whereas an unlimited liability company will have its liability reach past the shareholder and into their personal finances if it's required.

Corporations have the distinction of being able to be publicly traded companies or private entities. Private companies can't have their shareholders be over 100 people, can't be sold to the general public, and can't transfer to another person with the company’s written consent. Public companies are owned by the public and can be sold to the general public without restrictions.

The Good:

• It's a legal entity

• Risks are shared between all of the shareholders

• More significant profits & productivity because of their legal status

• Greater possibility of expansion, development, and growth

• Capital can be raised from the sale of stock in the company

• A more attractive investment opportunity

The Bad:

• Lots of initial capital is needed for setup

• The existence of double taxation since shareholders suffer corporate and individual losses

• Loss of control since outside interest can buy up a majority of the stock

• More strict conditions for registration since the government must monitor it