|
|
A client who has decided to
begin a new business may, if he or she
chooses, conduct that business in his or her
personal capacity. A business conducted in
such a manner is known as sole
proprietorship. When one or more persons
join together in a for profit business, they
are usually considered as partners in a
“common law partnership.”
In a sole proprietorship and
in a common law partnership, the owners of
the business are not legally separate from
the business. As such, the debts and other
liabilities of the business become the debts
and liabilities of each of the owners.
Therefore, the personal assets of the owner
would be
subject to seizure for the satisfaction of
business debts.
Corporations, limited liability companies,
limited liability partnerships and other
legal entities provide an important
advantage: if properly managed, those
entities are separate legal entities from
the owners.
In such a case, the owners
(called "shareholders" in a corporation,
"members" in a limited liability company, for
example) are usually not personally liable for the
debts of the business due to their status as
owners. If the business
conducted through such and entity fails, the
owner may lose the value of his or her
investment in business, but the rest of the
owner’s personal assets may be protected.
Therefore, for many reasons, it may be a
better choice to engage in business through
an artificial business entity. The choice
of a particular entity requires an
understanding and analysis of many things
including number of owners, the desired
management structure, the service or
product offered, tax issues, the capital
requirements of the business and future
business plans.
We assist our clients make a
sensible choice, and perform the services
required to help our clients begin their
businesses.
|
|
