Find a Business Organizations Lawyer
U.S. businesses are regulated by federal and state statutes, as well as local (county and city) regulations and various industry association regulations. Business organization laws are complex and vary from one region to another. They include such matters as taxation, shareholder issues, employment law, property law, energy and environmental law, zoning matters, export and import procedures, asset protection, as well as recent privacy and safety laws. The Uniform Commercial Code (adopted by all states) governs all business transactions (except maritime transportation of goods.
Roles of Attorneys
Attorneys usually act upfront to interpret the laws or to handle record-keeping, contractual and regulatory compliance matters for their business clients. They also represent business plaintiffs and defendants in lawsuits involving negligence; damages; fraud; contract breaches; taxation; as well as legal issues associated with mergers, acquisitions, divestitures and spin-outs.
And professional legal advice is invaluable when it comes to starting a business. Although the Internet makes downloadable forms available to entrepreneurs, starting a business encompasses far more than filling out forms. It's best to retain an attorney to help you understand contracts, liabilities, asset protection, Workers' Compensation coverage and other employment law matters, as well as intellectual property matters and eCommerce.
Business Entity Structures
There is no one best structure appropriate for all businesses. The decision to form a corporation, partnership or sole proprietorship depends on requirements, available resources, marketplace competition, and the desired degree of financial exposure. The success of a business from everyone's perspective (owners, partners, investors, employees, customers, supply chain partners) will be enhanced by the right choice.
Business structures are legal entities; they each carry a different set of legal obligations and benefits as well as tax consequences and other liabilities. Lawyers can help you understand how these complexities will impact your business vision.
Sole Proprietorship — Basically, this means an individual is in business for him/herself; there are no employees. The owner is financially responsible for every aspect of the business and has sole control and decision-making authority. This is the simplest legal structure to develop, and start-up costs are lower. The impact of decades of downsizing and outsourcing, together with an aging workforce, has caused a significant growth in the number of sole proprietorships in the United States. The disadvantages of this type of legal entity center on the fact that the proprietor/owner's personal assets (home, automobile, etc.) can be seized if the company files for bankruptcy or loses a lawsuit. Business profit is taxed at the individual's rate.
Partnership —Within this business organization structure, the various partners contribute their money, expertise and other resources to the business in return for a percentage share of income (and a share of loss). Partnerships can be limited or general. Limited partners have limited responsibilities and liabilities, and they have no management rights. General partners are equally liable for debts and judgments against the company. Partnerships have the disadvantage of requiring a great deal of compromise and mutual trust, and many of them fail. The partnership entity itself is not taxable; tax liability rests with the individual partners' income.
Corporation — A corporation is a separate entity from its owners, directors, officers and shareholders. Any liabilities will be borne by the entity and not extend to the personal assets of the shareholders. U.S. laws permit C Corporations (earnings are subject to taxes at both the corporate level and when distributed to shareholders) and S Corporations (taxed like a partnership, with income and loss on individual shareholder tax returns).
Limited Liability Company — This entity is like a corporation in the way the owners are protected from personal liability, but it is like a partnership when it comes to taxes.