Winston-Salem & Greensboro Business Formation and Coaching Attorneys
Experienced guidance for business startups and entities in the Piedmont Triad
When forming a company, owners have a number of entities available to them. These include corporations, limited liability companies, or limited liability partnerships. Each type of entity has its own specific rules and regulations regarding its operation, and each type has its own advantages and disadvantages, depending on the kind of business being established.
Selecting the proper business entity is essential to the successful operation of a business. Every company has its own specific needs and goals, and business formation strategies should reflect those. The business law attorneys at Hartsoe & Associates, P.C. help clients analyze their objectives and ensure they have the proper legal entity to align with their enterprise.
Which entity is right for my North Carolina business?
When choosing an appropriate entity for a business, our attorneys weigh the benefits and drawbacks of all available options. These can include the following.
The easiest type of business to form, a sole proprietorship is one person. It is not necessary to submit any forms to the state of North Carolina or the Internal Revenue Service (IRS). Depending on the type of business, the proprietor may need to acquire a business license. Sole proprietors are required to pay self-employment taxes.
When considering a sole proprietorship, clients must remember they are personally responsible for everything. If their business is sued, they must pay any judgements against them from their own personal assets. Our attorneys can help you take the next step from a sole proprietorship to formalize your business and mitigate your risk.
A general partnership is when two (or more) people agree to do business together for profit. All partners play management roles and all partners are responsible for any liabilities. This means if one partner is the subject of a lawsuit, all partners are involved and liable. A partnership is similar to a sole proprietorship, except more than one person owns the business.
A limited partnership is much like a general partnership. However, one (or more) of the partners has no management control or input and is there for investment purposes only. This partner receives income from the business and also holds limited liability for company debts or lawsuits. Limited partnerships are required to file paperwork with the NC Secretary of State.
Limited liability partnership
A limited liability partnership (LLP) combines the advantages of a partnership and a corporation. In an LLP, all the partners enjoy limited liability from the negligent behavior of another partner(s). However, any partner may be held personally responsible for any type of business malpractice he/she commits. LLPs must be registered with the NC Secretary of State. These types of partnerships are a relatively safe business entity for all partners.
Limited liability company
Limited liability companies, or LLCs, are a common option for businesses as they have fewer formalities as a corporation. LLCs tend to be popular due to their tax advantages. Although LLCs operate like a corporation, the financial distribution to the owners are not subject to taxation at the corporate level. Instead, profits are taxed at the personal level only – meaning that LLCs avoid the double taxation of corporations. An LLC also protects the owners’ personal assets from business creditors and lawsuits. LLCs must be registered with the NC Secretary of State.
Corporations are the most formal type of business. Incorporated companies have a board of directors, empowered to make overall management decisions, and shareholders, who invest in the company and receive dividends in return. To form a corporation, individuals must file papers called Articles of Incorporation with the NC Secretary of State, as well as request an Employer Identification Number (EIN) from the IRS. The state also requires a number of other rules, depending on the type of corporation, which our business formation attorneys are happy to explain.
Clients may choose from two types of corporations, depending on their needs:
- A C-Corp is the traditional corporation. The main disadvantage of the C-Corp is the double taxation. Whenever a corporation makes money, it pays taxes. Then, when the shareholders receive their dividends, they pay their personal taxes as well. However, because a corporation is a separate entity, shareholders have zero personal liability for the corporation’s actions.
- An S-Corp is a different type of corporation, and is taxed differently than a C-Corp. An S-Corp cannot have more than 100 shareholders, and any shareholder who works for the company must pay him/herself “reasonable compensation.” Profits from the business are not double-taxed, and appear only on each shareholder’s personal tax return. Filing requirements for an S-Corp tend to be detailed and complex.
These are only a few of the options prospective business owners have to choose from when forming a business. Additionally, clients must take into consideration a variety of other dynamics unique to their business.
Factors to consider when forming a Winston-Salem business
The experienced attorneys at Hartsoe & Associates, P.C. assist clients in identifying the key factors in forming a business, including:
Consulting with skilled lawyers right from the beginning allows clients to build a strong foundation for their business – minimizing personal and professional risk and protecting the company’s assets. Our legal team works proactively to address any legal issues before they arise, helping ensure profitability and financial safety.
Greensboro business coaching and guidance
Forming a business is only the start. The lawyers at Hartsoe & Associates, P.C. provide guidance to clients throughout the lifecycle of their company:
- Formation. Advice on the choice of business entity, creation of articles of incorporation, partnership agreements, and any other necessary legal support to ensure a strong foundation.
- Growth and success. Of course, with growth and expansion come other business issues. The company may need to purchase real estate, expand executive compensation packages, and acquire other assets or companies.
- Business challenges. Problems or disputes arise during the lifecycle of any business. These can include contract disputes, vendor disputes, or partnership and shareholder disputes. Our business litigation attorneys work swiftly to resolve these issues and ensure our clients’ companies stay on track.
- Dissolution. When a business comes to the end of its lifecycle, voluntarily or not, our attorneys assist in settling accounts properly and in a timely manner. We ensure every loose end is accounted for, and help file all necessary paperwork.
Skilled legal advice on business formation and growth
At Hartsoe & Associates, P.C. our business formation attorneys work with partners and entrepreneurs to achieve their goals. From guidance on the proper business entity to providing the tools to grow and succeed, we support clients throughout the lifecycle of their company. We represent business owners in Winston-Salem and Greensboro, as well as the Piedmont Triad. To schedule a consultation with an experienced attorney, please call 336-725-1985 or fill out our contact form.