Working with a Business Planning Lawyer to Choose a Business Entity: Part II
A previous post looked at some of the most common business entities that a Cook County business planning lawyer will recommend for clients. From the simplicity of a sole proprietorship to the complexity of a C corporation, that piece shared some advantages and disadvantages of each entity when it comes to implementation, accountability, and taxation.
With so much at stake, it’s a good idea to familiarize yourself with all of the choices for setting up your business the right way. Most of the information in these two articles applies to Federal aspects of business ownership, as states have their own requirements. That’s just another reason to work with a qualified Cook County business planning lawyer, as he or she will be able to outline specific state laws and regulations that apply to your situation. This is a very limited view into the different business entities, so consider it a jumping-off point for more research.
Today’s post introduces a few more options that an individual might want to discuss with a business planning lawyer in Cook County before making a decision.
- Single Member Limited Liability Company: Sometimes a single business person prefers for their business to be treated like an LLC. Of course, the difference is that there is only one member. Like a sole proprietorship, the member may file taxes using his or her individual taxpayer form 1040. However, the member may also choose ‘S’ or ‘C’ corporation taxation.
- Limited Liability Limited Partnership: Because it is only an option in some states, the input of an Illinois business planning lawyer is particularly helpful when considering this entity. Just as a limited liability partnership works similarly to a general partnership but with limited liability, a LLLP works similarly to a limited partnership with the addition of limited liability. Tax-wise, it works much like a general partnership, too.
- Professional Corporation: This type of entity is only available to specific types of businesses and limits the business to providing only those services. There are also stringent regulations on who may or may not hold shares in the company. A doctor, attorney, or other professional would likely want to discuss this type of entity with a business planning lawyer when starting their own practice.
- Corporation Sole: With some rising popularity, this type of entity is generally reserved for religious purposes. The temptation to use this business entity is huge because it can circumvent Federal taxes. That said, the IRS recognizes that businesses are attempting to get out of their legal tax obligations in this way, and they are not pleased. It is highly recommended to consult with an experienced Cook County business planning lawyer before even considering corporate sole.
Whether this list has made your head swim or has cleared your thinking on the subject, choosing a business entity is something that should be done carefully. Working with a Cook County business planning lawyer is a great way to make sure you’re seeing all of the implications before making a legal commitment.