Business Formation, Management, and Operation Law
you are planning to start new business, it is important to operate it
under the right type of legal entity. The general types of legal
entities are as follows:
Sole proprietorship. If you
run a business as an individual, without creating a special legal
entity, your business will be considered a “sole proprietorship”. A
person operating a business as a sole proprietorship is personally
liable for all of the debts of the business.
If you and another person or persons run a business together, without
creating a special legal entity, it will be considered a general
partnership. Each general partner is personally liable for all of the
business’s debts as well as the liabilities created by any other
Corporation. If you
incorporate your business, you generally will not be personally liable
for the debts of the business. However, your corporate stock (your
ownership interest in the corporation) can be taken by your personal
creditors in the event you are unable to pay your debts.
Limited Liability Company.
If you set up your business as a limited liability company, not only
will you not be personally liable for the debts of the business, but
your creditors may be unable to take your ownership interests in the
If you conduct a
business with other persons, you should have a shareholders’ agreement
or operating agreement that specifies each person’s rights and
If you are interested in setting up a new business,
or need legal assistance with any aspect of your existing business, please contact us to discuss how we can assist you.
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