Providence & Boston Business Formation and Organization
Starting a new venture can be exciting and rewarding for entrepreneurs but can be risky. It is important to consider the pros and cons of different forms that you can choose for the new venture. Some forms include but not limited to; a sole proprietorship, a corporation, a professional corporation, a general corporation, a limited partnership, a limited liability partnership, a limited liability company, and finally a professional limited liability company. Based in Providence, Rhode Island business formation lawyers at Barsom Law Group can assist you in all stages in the formation of your business. We can give the right guidance with regards to the form of entity and draft the necessary documentation. If a business dispute were to arise, we can assist you with that as well.
The entity form you choose will have many different affects on your business including capital formation, taxes, personal risk and daily operation. Entrepreneurs need to choose entities that offer a balance of protection and benefits. The entity form should be chosen before registering the business with state and federal agencies as well as before entering into any contracts. The form or entity you choose for your business can have an impact on many aspects of it, including whether or not you are successful in the venture. Its critical to choose the right form that will provide the right level of protection and benefits for the business. If the business is a small operation in which you will be handling the day-to-day operation, a sole proprietorship may be appropriate. If, however, a small group of individuals come together to form a business, then it may be appropriate to create a partnership or LLC and create an operating agreement that will detail the rights and responsibilities of each person.
A business owner who wants to have complete control of the business but does not want to register or maintain separate business assets and liabilities may choose a sole proprietorship. Capital formation through stock issuance is not an option under a sole proprietorship and the ability to obtain a loan from a bank may be challenging. However, the advantage of this form is it allows an entrepreneur to bring new products or services to the market before forming a larger business.
When you have two or more people who want to start a new venture, a partnership may be a suitable option. There are a few different types of partnerships. In a limited partnership, you have one general partner that assumes unlimited liability while the other partners assume limited liability. Profits from the business would pass through to personal tax returns. Additionally, the general partner would pay self-employment taxes. Unlike a limited partner, in a limited liability partner, each partner has limited liability and each partner is protected from debts against the partnership. It is wise for the partners to outline in detail how they will operate the business and resolve disputes if they arise. An operating agreement would detail the nature of the partnership and a business formation attorney in Providence can assist the owners draft this agreement.
A limited liability company provides protection to owners from personal liability and can be a good entity for business that have a high risk. This entity gives the owner more options with regards to how profits are distributed, especially when compared to partnerships. No formal minutes or resolutions are required, making an LLC more informal versus a corporation. An LLC form carries more complexities and paperwork then would a sole proprietorship. In most instances, the owner will not be liable if the LLC goes bankrupt or if it gets involved in a lawsuit. Profits and losses are passed through to your personal income, and you will be considered self-employed, which entails paying self-employment tax contributions to Medicare and Social Security. This is an ideal form for professionals such as attorneys, doctors, public accountants and engineers.
Corporations are entities that are separate from their owners and shareholders. This form provides the most protection against personal liability to the owners and shareholders. Capital formation is easier because the corporation can raise capital by selling stocks or issuing bonds. Forming a corporation can be expensive and time consuming because of the records that have to be maintained and reporting that needs to be done. This is a good option for a business that is going public or will be sold eventually.
Varying steps need to be taken depending the entity form chosen. The owners forming the business need to prepare and file articles of incorporation, establish a corporate record book, prepare corporate bylaws, appoint corporate directors, hold a board of directors meeting, issue stock, as well as file annual report with the state. Our team has a solid understanding of all entity forms and can help you decide on which form will best serve your goals.
At Barsom Law Group, we work with startups and new companies at various stages in their venture. With the many options available for a business structure, choosing the right form of entity can be a challenge for an entrepreneur. Located in Providence, an hour south of Boston, Barsom Law Group business formation lawyers offer strategic startup guidance that enables their clients to succeed in early in their venture. Merging short term goals with long term planning in the initial phase can make an impact for a business once it develops and grows.
Our Providence attorneys are available to assist in all phases of the startup including forming the business structure, putting together company policies, bylaws and employment agreements. Given our diverse experience, our clients benefit on matters we have become familiar with at the earliest stages of development.
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At Barsom Law Group, our Providence and Boston business formation lawyers strive to mitigate risk and take a proactive steps in business formation. We understand that each business is different and needs a tailored approach throughout the life of the business. With our experience handing business formation and business transactions, you can rest easy knowing that our Providence and Boston business attorneys will go the extra step to help your startup business become successful and advise you at various stages in the business.