Corporations, Partnerships and Limited Liability Companies
Grand Junction Business Attorney
When choosing a business entity for a new or existing business, the owner or owners must first analyze the goals of the business, their tolerance for paperwork and the need to shelter the business and owners from lawsuits and claims. The four most commonly used business entities are: (1) Sole Proprietorships; (2) Partnerships; (3) Corporations; and (4) Limited Liability Companies (LLC). Within those categories are variations including Limited Partnerships (LP), Limited Liability Partnerships (LLP), Limited Liability Limited Partnerships (LLLP), Subchapter S Corporations and Single Member LLCs.
Most of these forms are taxed at the individual level and each of these entities has other distinct advantages and disadvantages. For Estate Planning purposes, most small businesses choose an LLC, Family Limited Partnership (FLP) or corporation for their business structure. Generally, the owner of one of these entities cannot be held legally liable for claims or lawsuits against the entity. Owners or LLC members are responsible, however, for their own negligent acts or fraud and are liable for any personally guaranteed loans to the business.
In terms of asset protection the FLP or LLC affords more protection from lawsuits against the owner or member. Whereas a creditor of a FLP partner or LLC member can seize only the distributions made by the FLP or LLC, a creditor of a corporate shareholder may seize his interest and sell the shares or force the corporation to buy the shares from him.
Whether your business venture is in its earliest stages or you have an eye to the future protection of your assets, it is paramount that your business entity conforms to your overall estate plan and supports the goals of the business. Seeking the advice of your qualified business attorney and CPA should be your first step in selecting the business entity that fits those objectives.
The Law Offices of James A. Littlepage in Grand Junction provides detailed and personalized business planning services. A former CEO of a business with $50,000,000 in annual sales, Mr. Littlepage has the knowledge and expertise to assist you in establishing a business entity that fulfills your goals and objectives. For assistance please contact our Grand Junction office.