One of the first and most important decisions you now face is deciding what form of business entity to own and operate your business venture. There are several options, including-
• a sole proprietorship or general partnership;
• a limited partnership;
• a limited liability company;
• a limited liability partnership;
• an S-corporation; or
• a regular corporation- a C-corporation.

For nearly every business owner reading this article, the choice is fairly simple. Most Indiana businesses should operate either as an S-corporation, regular corporation, or limited liability company. These three entities offer business owners limited asset protection and relative ease of operation. In deciding the best business structure to utilize, each business owner should consider a variety of general factors and also the circumstances unique to the business, its owners, and its opportunities and challenges.

Before forming a new business entity, a good business attorney will spend time with a business owner to discuss and consider factors such as these-

• Will the business consist of an operating entity or a holding company?
• What are the likely tax liabilities arising from the business?
• If an operating entity is chosen, can FICA taxes be minimized?
• How will the business be financed?
• What is the exit strategy?
• What business risks are being avoided?
• Do the owners and managers have the requisite training and vigilance to maintain a more complicated structure?
• What are the costs, benefits and burdens of creating a particular business structure?

As explained above, a business should be operated as a limited liability entity to protect the assets of the owners. That is the central reason to form a business entity.
One of the first and most important decisions you now face is deciding what form of business entity to own and operate your business venture. There are several options, including-
• a sole proprietorship or general partnership;
• a limited partnership;
• a limited liability company;
• a limited liability partnership;
• an S-corporation; or
• a regular corporation- a C-corporation.

For nearly every business owner reading this article, the choice is fairly simple. Most Indiana businesses should operate either as an S-corporation, regular corporation, or limited liability company. These three entities offer business owners limited asset protection and relative ease of operation. In deciding the best business structure to utilize, each business owner should consider a variety of general factors and also the circumstances unique to the business, its owners, and its opportunities and challenges.

Before forming a new business entity, a good business attorney will spend time with a business owner to discuss and consider factors such as these-

• Will the business consist of an operating entity or a holding company?
• What are the likely tax liabilities arising from the business?
• If an operating entity is chosen, can FICA taxes be minimized?
• How will the business be financed?
• What is the exit strategy?
• What business risks are being avoided?
• Do the owners and managers have the requisite training and vigilance to maintain a more complicated structure?
• What are the costs, benefits and burdens of creating a particular business structure?

As explained above, a business should be operated as a limited liability entity to protect the assets of the owners. That is the central reason to form a business entity.

One of the first and most important decisions you now face is deciding what form of business entity to own and operate your business venture.  There are several options, including-

•    a sole proprietorship or general partnership;
•    a limited partnership;
•    a limited liability company;
•    a limited liability partnership;
•    an S-corporation; or
•    a regular corporation-  a C-corporation.

For nearly every business owner reading this article, the choice is fairly simple.  Most Indiana businesses should operate either as an S-corporation, regular corporation, or limited liability company.  These three entities offer business owners limited asset protection and relative ease of operation.  In deciding the best business structure to utilize, each business owner should consider a variety of general factors and also the circumstances unique to the business, its owners, and its opportunities and challenges.

Before forming a new business entity, a good business attorney will spend time with a business owner to discuss and consider factors such as these-

•    Will the business consist of an operating entity or a holding company?
•    What are the likely tax liabilities arising from the business?
•    If an operating entity is chosen, can FICA taxes be minimized?
•    How will the business be financed?
•    What is the exit strategy?
•    What business risks are being avoided?
•    Do the owners and managers have the requisite training and vigilance to maintain a more complicated structure?
•    What are the costs, benefits and burdens of creating a particular business structure?

As explained above, a business should be operated as a limited liability entity to protect the assets of the owners.  That is the central reason to form a business entity.

Sole proprietorships and general partnerships offer no protection to their owners or to the entity itself.  By contrast, limited liability companies, limited partnerships and corporations are limited liability entities which provide significant but limited protection from liabilities arising from the business’ operations.  Generally, what is at risk for an owner is the value of the investment made by the owner in the entity.  Business lawyers refer to this as “inside out protection,” because the liabilities arising inside the entity will not reach the assets of the owner held outside of the entity.

Of course, selecting the right entity is just the first step in this process.  Careful drafting of documents, the proper filing of documents with governmental offices and establishing processes and procedures to follow the so-called “corporate formalities” are equally important steps in limiting the liability risks to the business’ owners.  These topics are addressed in other articles, but the entire process starts with the list of factors relevant to selecting the right entity.

If you are starting a new business or are unsure whether your current entity is properly structured, contact your business attorney to review the issues raised in this article.