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Business Formation, Management, and Operation Law

If 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.

• Partnership. 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 partner.

• 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 company.
  

If you conduct a business with other persons, you should have a shareholders’ agreement or operating agreement that specifies each person’s rights and responsibilities.

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.