Start-Up and Incorporation Lawyers
Every small business should at least consider incorporation into some form of legally cognizable business entity. Incorporation or business formation is the legal process of creating a separate legal entity such as a limited liability company (LLC) or a corporation to operate a business. After incorporation, the company becomes a separate legal entity, able to own property and enter into contracts.
By default, a business is considered to be a sole proprietorship or a general partnership. Neither of these legal forms offer legal protection for the owners’ assets, so the sole proprietor or partnership form should usually be avoided. The small business attorneys at KM&A are ready to answer any questions you have about incorporating your small business and taking care of its legal needs.
Advantages of Incorporation
There are numerous advantages associated with creating an LLC or a corporation. The major advantages of incorporating are:
- Personal asset protection for the owners/partners
- Customized ownership/equity rights and responsibilities
- Tax flexibility and advantageous treatment
- Professional image
Without incorporation, the owners and their personal assets are at risk if anything goes wrong with the business. Forming a legally independent entity protects the owners’ assets by separating them from the assets of the business. Incorporation also allows the owners to select the way they want to be taxed, giving them options to reduce their tax burden substantially. Finally, customers appreciate the professional image associated with a business that is incorporated.
Cost of Incorporation
Relative to the benefits of incorporation, the cost is minimal. At KM&A, we are conscientious of the budgets that small business have to work with, and we work efficiently to complete the legal setup of an LLC, corporation, or non-profit with minimal costs. We typically offer these services for a low fixed fee that includes costs and filing fees. Before we enter into any relationship with a new client, we always offer a free consultation with one of our business attorneys to make sure that you make an informed choice and select the legal entity type that makes the most sense for your small business.
Four basic steps are the foundation of forming an LLC, but also an LLC requires consideration of certain factors like tax liability and bank accounts.
When any changes are made to a limited liability company (LLC), both the operating agreement and the articles of organization must be amended.
Three types of legal forms dominate the business world, but each is equipped differently to serve your business so it’s vital to choose wisely.
Options for Business Entities
There are several ways that a business can be legally structured when it is incorporated. Each legal form has advantages and disadvantages. Some of the most common business entities are below, along with highlighted distinctions.
- Limited Liability Company (LLC) – The LLC is the most common modern form of small business organization. These companies are highly flexible and provide the highest protection to the owners. One of the only significant disadvantages is that LLCs cannot be publicly traded.
- Corporation (Inc.) – In the past, the corporation was the standard legal entity. Today, this form involves more paperwork and technicalities than the LLC, usually without providing additional protection.
- Non-Profit Corporation – This legal form is similar to that of a for-profit corporation, but a non-profit corporation is formed for some community, educational, or charitable purpose. Additional regulations apply, but non-profit corporations can benefit from tax exempt status.
- Limited Partnership (LP) – The limited partnership splits the owners of the business into two groups: limited partners and a general partner. This form of entity offers liability protection for the limited partners, who are treated as investors. There is no liability protection for the general partner, who retains most of the control of the business.
- Professional Limited Liability Company (PLLC) – This is similar to the limited liability company form, but designed for restricted professional activities only.
- Professional Corporation (PC) – This is similar to the corporation form, but designed for restricted professional activities only.
Small Business Incorporation Packages
The legal packages we provide to small business start-ups include multiple services, bundled together in one flat fee. For the typical small business, our services include:
- Entity selection – We learn about our clients and the nuances of their businesses to determine the best legal structure applicable to their individual circumstances.
- Name availability – We use state and federal databases to make sure there are no issues with the company’s desired name.
- Formation – We draft and file the paperwork to legally form the new company.
- Registration – We register the new company with state and federal governments as necessary to obtain EINs and employment accounts.
- Consultation – We meet with the owners to develop short, medium, and long-term goals for the business. We help them connect with other professionals (bankers, accountants, insurers, marketers, and advisers) who can help the business get off the ground.
Kraemer, Manes & Associates LLC “KM&A” is a law firm serving all of Pennsylvania with our principal offices in Pittsburgh and Philadelphia. Call KM&A in western Pennsylvania at 412-626-5626 or in eastern Pennsylvania at 215-618-9185. KM&A can be reached by email at firstname.lastname@example.org.