Legal considerations for business formation

| Oct 21, 2020 | Business Law |

Starting a business is the dream for many Americans. Entrepreneurial spirit is strong in Wisconsin, where people start all kinds of companies. Most small business people put a lot of thought into the services and products they want to offer. But many don’t put enough thought into the structure of their new business. In the long run, business formation can be as important as any other aspect of running a company.

The benefits of an LLC

Limited liability companies, LLCs, are often the best choice when structuring a business. LLCs have the effect of separating personal property from business property. This means that, when a businessperson is sued, assets like their residence and cars can’t be considered in a judgement.

LLCs are governed by state laws. The rules about LLCs in California will be different from the laws in Wisconsin. But in general, the parties who own an LLC are known as members. These don’t have to be people. They can be corporations, foreign entities or even other LLCs.

In most states, almost any kind of business can be set up with an LLC structure. Exceptions to this are usually in the world of finance. Banks and insurance companies typically can’t be LLCs. Finally, the IRS, sometimes, views LLCs as corporations and, sometimes, as partnerships. It’s wise for businesspeople to consult an accounting professional about their LLCs at tax time.

When starting a business, it’s also generally a great idea to consult an attorney experienced in the business law process. They’ll have insights about what structure is best for your goals. They’ll also know which is the most advantageous business structure under the laws in your state.