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Starting a new business means making a wide range of important decisions, from choosing a business name to developing an effective marketing strategy. However, one of the most critical choices new business owners face is what legal form their endeavor will take. Business and corporate law can be extremely complex, so there are a variety of factors to consider before making this important determination.

5 Factors to Consider When Choosing a Corporate Form

1. Tax Consequences

business and corporate lawRevenues generated by a legally separate business is subject to double taxation, once at the corporate level and then as personal income when the proceeds are distributed to shareholders. Income earned through an LLC or partnership can be treated as personal income, although owners may be subject to other tax penalties in some circumstances.

2. Liability Protections

LLCs and corporations provide powerful protections against lawsuits and liability claims, separating your personal assets from those of your business. Sole proprietorship and partnerships may be easier to operate and less costly to file, but they offer no protection for your personal savings, home, or other assets.

3. Ease of Transferring Ownership

You may decide to sell your business one day or give your stake to a family member. Business and corporate law provide different avenues for transferring ownership of an organization, and some are easier than others. Corporations, for example, can be transferred simply by selling shares while partnerships must be completely dissolved and reformed.

4. Administrative Tasks

C corporations provide some attractive benefits for business owners in certain industries, but they are subject to strict guidelines under state law. If you decide to form a corporation, you’ll be required to hold regular board meetings, keep detailed records, and file annual reports with government agencies.

5. Acquiring Capital

At some point, you may wish to find investors to help develop your business. In most cases, C corporations are more attractive to investors, as they’re designed to grow simply by issuing stock. Generally, LLCs and sole proprietorship have a significantly more difficult time acquiring capital from these sources.


 

If you’re planning to start a new business in the Willamette Valley area, Stayton Law offers the expertise and dedicated attention your investments deserve. This team of legal professionals prides itself on combining the level of service typical of larger law offices with the client attention you would expect from a boutique firm. Visit the website for more information regarding the background and services, or call (503) 769-7741 to speak with a business and corporate law attorney today.

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