June 30, 2006, Newsletter Issue #20: I want to start a small business; what is contained in “business law?

Tip of the Week

There are several ways a business can be organized, including:

sole proprietorship
a general partnership
a corporation
or a limited liability company.

There are variances within these four different ways to organize a business but most businesses fall under one of these categories.

In order to figure out which type of business you wish to organize, consultation with a reputable business litigation attorney who is familiar with the laws governing this area may be helpful.

All of these classifications can affect your tax liability as well as future liability for legal judgments against your business. Some small businesses can easily begin with major exposure to personal liability because there are no employees and a low debt ratio as well as a limited expectation for the risk of lawsuit. In that case, a sole proprietorship or general partnership may be the best way to organize your small business.

Corporation status and limited liability company status may benefit a business that intends to employee help from the beginning and also has to make use of start up capital. Limited liability status may limit the personal liability should a legal proceeding be taken out against the company as well, such that the business owner’s personal assets will not become jeopardized should this occur.

Because of the complexities of business law, it is always advisable that you consult a business litigation attorney to incorporate their expertise in your professional and business plan.

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