business

Seattle New Business Owners: Tips for Choosing Your Business Entity

Selecting what kind of business you create is very important.  It affects everything from the way you are taxed to the amount of liability you may have.  There are a handful of different entities. Have a look at them all and decide which is best for you with the assistance of a Seattle business attorney.  Don’t forget, you aren’t forever locked into that structure.  As your business evolves, so can its entity.  What is important is that you consult a Seattle business attorney before you make this critical decision for your new business.

How much thought have you put into structuring your new business?  How informed are you about the different options available?  If you haven’t given it deep thought, or are simply “at a loss” to know how to proceed, the good news is that you really shouldn’t have to agonize over the decision.  A qualified Seattle business formation lawyer can advise you on the relevant issues for each type of business entity structure.  Outlined below are the standard business entity types in the United States, and though many other countries have similar types of business entities, it is suggested that you investigate all of your business entity options with an experienced Seattle area attorney.  The summary below presents a brief synopsis of the pros and cons for each type of entity.  It is meant to initially educate you as a new business owner, and not to be used as the sole guideline for making this important decision.

Sole Proprietorship

  • Pro: Easy to create
  • Pro: Freedom from many regulations
  • Pro: Pass Through Entity
  • Con: Unlimited Liability
  • Con: Hiring People can be tricky

Partnership

  • Pro: Easy to create
  • Pro: Freedom from many regulations (although not as many as Sole Proprietorship)
  • Pro: Pass Through Entity
  • Con: Unlimited Liability for all partners
  • Con: Possible politics and issues between members

Corporations

  • Pro: Limited Liability
  • Pro: Well known entity type
  • Con: Difficult to set up
  • Con: Double Taxation (not pass through)
  • Con: Many Regulations to do business
  • Con: Difficult to operate

Limited Liability Partnership

  • Pro: Fairly easy to establish
  • Pro: Limited Liability
  • Pro: Pass through entity
  • Con: Must have at least two partners at all times
  • Con: Transferring interests is difficult

Limited Liability Company

  • Pro: Fairly easy to establish
  • Pro: Limited Liability
  • Pro: Pass through entity
  • Pro: Freedom of operation
  • Pro: One person can own 100% interest
  • Con: Hard to issue stock for an IPO

The last two entity structures in the summary above are the newest types established to encourage more individuals to start businesses and other investment projects.  Be certain to cover all of these entities with a Seattle business attorney to determine which one is best suited to meet your unique business and financial goals.  If you are entering your “first venture” as a business owner, it may be prudent for you to retain a Seattle small business lawyer who is both experienced in handling the legal paperwork, and interested in assisting small business owners.

Keep in mind that these entity type pros and cons are “generalizations” and their presentation has been greatly simplified for the purposes of this article.  There will be other things to consider when making your business structure decision.  Seeking the expert legal advice of a Seattle business formation lawyer, who actually specializes in this area, will insure that you make the appropriate choice. You want to be presented with comprehensive information about the benefits and negatives of each entity structure you are placing under consideration.