Businesses can be organized in many different ways; each type of structure is known as a business entity. If you are planning to start a business of your own, it is important to carefully review your options in this area. The type of entity you choose for your own company will have many implications for how it is run, how you will pay taxes, and who will be able to make decisions about your company’s future.
Opening and running your own business without legal guidance is needlessly difficult and risky. Our Iowa business startup attorneys can provide valuable information, advice, and representation as you carry out each step of running your business. Call the Iowa business lawyers of LaMarca Law Group, P.C. at (515) 705-0233.
Common Business Entities
Most – though not all – businesses fall into one of the following categories:
Sole Proprietorship/Partnership: This is a business model in which you and your business partners, if any, will be entirely in control of the company. This type of entity is generally easy to set up and will likely not require any government fees. However, it can also be a financially risky model. Your company’s profits will be taxed as your personal income, and you will be personally responsible for any losses in a lawsuit.
Limited Liability Company: If you decide to open this kind of business, you and its owner founders will develop a managing agreement – a document spelling out how the company will be run. The primary advantage of an LLC is that it is a legally separate entity from you as an individual. If a lawsuit is filed against your company, any damages awarded will come from the company’s resources and not your personal assets.
C Corporation: A corporation is a unique kind of business that is legally treated the same way as an individual person. As with an LLC, damages for any lawsuits filed against a corporation are paid out of the company’s assets. C Corporations are generally owned by shareholders who vote on a Board of Directors to control the company. They are taxed on both profits and shareholder dividends.
S Corporation: The basic structure of S Corporations is the same as C Corporations, but they are more closely regulated. An S Corporation can only have a certain number of shareholders, who must be citizens of the US. Some business owners prefer this kind of entity because it is only taxed on shareholder dividends, not corporate profits. Instead, its owners declare the profits as private income.
Our Iowa business lawyers can provide further information about business entities, including recommendations for your company.
The Iowa business entity attorneys of LaMarca Law Group, P.C. work hard to provide efficient services to each of our clients. Contact our offices today at (515) 705-0233.