When someone in Minnesota starts a new business, they might know what kind of service or product they want to offer but not understand where to begin with the legal aspects of the business. The type of legal structure a person sets up will affect the amount of taxes they pay, paperwork, personal liability issues and how they raise money. It is important for a business to take individual circumstances into account when making decisions about legal issues. Seeking guidance from business experts can be a very helpful strategy.
Since business law can be complex, a new business owner should seek advice from seasoned professionals, including lawyers, accountants and other experts who can provide solid input. They might turn to the Service Corps of Retired Executives or the Small Business Association for sound counsel first. These professionals offer a good starting point for answers to legal questions about business ownership.
The entrepreneur can choose one of several types of business entities, depending on their situation. A sole proprietorship gives total control to the owner, but they are also totally responsible for all financial issues of their company. A partnership includes at least two people who share responsibility for the profits and losses. However, they are still responsible for the business financially. A corporation is its own entity with a separate identity from the founders. The corporation is taxed, earns a profit and separates personal responsibility for those involved. However, the costs related with running a corporation are high. A limited liability company, or LLC, marries the benefits of a partnership and corporation.
Establishing the proper business structure can have serious consequences for the entrepreneur. A business lawyer might help an entrepreneur decide which type of business structure is best for them.
Source: Entrepreneur, “Choose Your Business Structure“, July 09, 2014