If you have a product you want to sell or you want to offer services to consumers in Maryland are ready to turn your ideas into an actual business, you will need to determine what type of business structure you want to follow. Will it be an LLC, an S Corp, or a sole proprietorship? If you aren’t quite sure what these are or you still aren’t sure what type of business structure you want to follow, read on below as we explain more in detail what some of the most common types are which may help you make an informed decision as to which one you want to register your business name under.
- Sole Proprietorship. What is it?
This type of business structure allows you to have “complete control of your business” and is best for “low-risk businesses and owners who want to test their business idea before forming a formal business,” according to the U.S. Small Business Administration (SBA). When you register as a sole proprietorship, it means you plan on engaging in business activities but won’t be registering as any other kind of business. And when you register your business as a sole proprietorship, “your business assets and liabilities are not separate from your personal assets and liabilities which means “you can be held personally liable for the debts and obligations of the business.” Now, this is something you will want to into account as some aren’t comfortable with combining their own personal assets with those of their business.
- What is a partnership?
There are two types of partnerships, limited partnerships (LP) and limited liability partnerships (LP). In an LP, there is usually one general partner who has unlimited liability and partners with limited liability, which means they “have limited control over the company.” An LLP is when all partners have limited liability and each is protected “from debts against partnerships” and they “won’t be responsible for the actions of other partners.” The SBA says this type of business structure is most suitable for business that have multiple owners, professional groups such as attorneys, and groups who are considering testing their business idea before turning it into a more formal business.
Now, if you are forming a partnership and will be working with others, you may want a MD employment law attorney to work collaboratively with all of you to establish the rules and guidelines you want your business to follow.
- What is an LLC?
An LLC, which stands for limited liability company, is a good choice for businesses that are considered to be medium to high risk. They are also a good option for “owners with significant personal assets they want to be protected, and owners who want to pay a lower tax rate than they would with a corporation.” The benefits of having an LLC is that your personal assets are protected from your business assets which means you wouldn’t be at risk of losing your home, vehicle, or money stored in your savings accounts if your business were to file for bankruptcy.
Corporations, which are broken down into different categories including S corp, C corp, B corp, close corporations, and nonprofit corporations are also common types of business structures owners will register their business name under and you can read more about these by visiting the SBA website.
Not sure which business structure is the right one for you?
Like most new business owners, you may not know which business structure is best for you which is why you should seek legal advice from a Bethesda, MD business law attorney. Business attorney Michael E. Gross, who is one of the best lawyers in the field, is available to sit down with you, listen as you explain what type of business you are looking to establish, and help you decide which structure is best to register it under. It is important that you choose the right type of structure that is most suitable for your business so that you don’t put your assets at risk of being taken.
Starting a business is both scary and exciting and it is important that as you navigate through the steps to get it established, that you have a reputable business lawyer assisting you along the way to make sure everything is done properly. Therefore, you are encouraged to contact The Law Offices of Michael E. Gross today to schedule an initial consultation and find out more about what each structure is and which one is most suitable for the type of business you are starting.
You can reach The Law Offices of Michael E. Gross at:
4800 Hampden Lane, #200
Bethesda, MD 20814