Business owners, how are you doing business? What is your entity formation? Are you a sole proprietor? A partnership? General partnership? A limited liability company? A limited liability partnership? C-corp? S-corp? How are you doing business?
The Decisions Behind Business Formation
A lot of people are unclear about this. They like the idea of a corporation because they know about this limited liability. However, there are tax considerations to make when you make that decision. I prefer the limited liability company because it affords you the luxury or the ease that you have in making decisions. You can make decisions like a partnership, but you can also have the luxury of the limited liability, so it's a hybrid organization. And then when it comes around to taxes you just check the box as to how you want to be taxed by the IRS.
Your Business Formation Affects Operations
Your entity formation has a whole lot to do with how you operate your business. How are you going to plan for succession? Also some have gone on LegalZoom, or whatever, and gotten some documents to form an entity, but do you have the proper operating agreement? If you are a C-corp, do you have a C-corp or if you're a C-corp, do you have your bylaws? If you don't have those documents, the banks are not really going to let you open up any accounts. It is just good to have these things in place because this gives you directives as to how you're going to operate your business, what is the liability designation? What is the scope of what you're doing?
Corporations Are People, Too
If you are going to choose a limited liability company or a corporation, this is a separate and distinct fictitious person. Just like you were born and you got a birth certificate, when your company was born it got a charter. Even though you may own 100% or 50% of whatever it is, it's still separate and apart from you. To avoid any problems with your corporate veil being pierced or for your personal assets being reached for a bad business deal, it's important to check, to do a checklist, to do an assessment of how you're operating.
Checklists Help Your Business Stay Ahead
What things do you have in place to ensure that you stay operational and that you stay sustainable? If you would like us to give you a checklist for your business operations, please send me an email at [email protected] It's always a pleasure to talk to you, and we'll see you next time. Thank you.