What is Business Formation?
Committed to Protecting Your Business
All businesses are operating under some type of ownership. Many small businesses are called sole proprietors because they are owned solely by the proprietor who is operating the business. Other businesses are formed as a limited liability company (LLC) or a corporation. The legal action of creating an LLC or corporation is called business formation.
Reach out to our law office today at (618) 717-4409 to schedule a consultation with one of our experienced attorneys to get started on your case.
Why do I need to form a business?
The main purpose of formalizing a business into an LLC or a corporation is to limit the personal liability of the owners. Without the formal organization of a business, all liability falls to the owner. If you have a business partner, that liability extends to all partners both separately and jointly. This means that if you are involved in a lawsuit, all personal bank accounts, real estate, cars, and assets are at risk in addition to any business assets such as vehicles, equipment, and buildings – even if your partner is the one at fault.
I have umbrella insurance coverage, so why do I need to formalize my business?
Formalizing your business is all about protecting your assets just as your umbrella insurance is about protecting your assets. The difference being that by formalizing your business, you could prevent the need to file a claim with your umbrella coverage by limiting your liability at the company door before it passes to you. Furthermore, if your business is found to be in breach of contract, most umbrella policies will not cover your personal liability.
How will forming a business affect my income taxes?
If you form an LLC, the profit or loss from the business will pass directly to your personal income tax return and be taxed at your personal tax rate. If you form a corporation – depending on the type of corporation formed – you may pass the profit or loss directly to your personal return, or the profit or loss may be paid by the corporation, and you will only pay tax on what you earn by being an employee of the corporation. Either way, you (or the corporation) will still be responsible for paying income tax on the profits, but with an LLC or corporation in place, you will have limited your personal liability in the event of a lawsuit.
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With years of experience, including a former prosecutor on our team, Levanti Law is committed to providing skilled, compassionate legal representation. Contact us today for a consultation and put your legal concerns in capable hands. We'll help you decide on your next step.
Real Experiences from Real Clients
Get To Know Us Through Our Clients Personal Experiences
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So easy to get an appointment! William was very knowledgeable. I had no clue as to the kind of help I needed. He was so helpful and made it so easy. Recommend?? I'm 46 years old and had no idea how helpful he could be because I've never been in this situation. Highly recommend this firm. Thanks so much for your help!April L.
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I am the Director of Marketing at Heritage Woods of Benton Supportive Living for Seniors 65+. We appreciate Bryce's assistance and advice to many Seniors in our community. Bryce has also been extremely generous in the sharing of his musical talents of singing and playing his guitar by window serenading our residents during the COVID pandemic. Actions such as these shows a man of good morals and integrity.”Lana R
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Took a lot of stress off, friendly, professional, the process was fast, thank you!Former Client
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“Bryce is incredible to work with.”Zach M.
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