Questions to Ask When Setting up a Legal Entity
Setting Up a Legal Entity
If you're serious about forming articles of incorporation, then consider hiring an expert attorney who can help you file everything properly. Here are some questions to ask your attorney (and yourself) before you move forward.
Do I even need to form an actual corporation?
Ask your attorney some pointed questions about whether or not you actually need to form a corporation (or if another business formation would be right for you). Ask about tax benefits, the ability to sell stocks and bonds, liability, and other significant differences between the different types of businesses.
What's an LLC? Is an LLC right for me?
A Limited Liability Corporation (LLC) is NOT a corporation or a partnership but combines advantages of both. If you want protection for you and your family's personal assets from seizure over business debts, and flexibility as to how you structure your business, an LLC may be right for you. Disadvantages of an LLC include the inability to sell stocks and bonds in the company.
What types of business should I form if I want to sell stock in my company?
Only corporations may sell stocks and bonds to raise capital. LLCs and Partnerships may not. Therefore, if you want to bring on stock-based investors, look towards the C-Corp and S-Corp structures.
I am running my business on my own. Should I form a corporation?
If you are a business of one, then you might want to consider forming a sole proprietorship. This type of business formation was built for those who choose to go it alone and features many benefits of larger companies (and several of the limits associated with non-corporations).
How much is it going to cost? How long does it take to file?
When you choose an attorney to assist you with incorporating your business, he or she will be able to tell how much it will cost (generally no more than a couple of thousands of dollars) to file everything, and how long the processing times will be. Remember, an attorney will charge you for his services, but the cost of working with an expert and insuring everything is filed correctly, is well worth it.