Forming a new business is about a lot more than simply filling the right paperwork with the Ohio Secretary of State. One of the most important decisions you must make when creating a new company is choice of entity. A successful company needs the right legal foundation. There are several options available, including sole proprietorships, partnerships, LLCs, corporations.
You may be wondering: How do you pick the right entity for your new business in Ohio? The answer depends on the nature of your business and your long-term objectives. In this article, our top-rated Cortland business lawyer highlights three key considerations for entrepreneurs preparing to create a new company in Ohio.
You Need the Right Structure for Your New Business
Liability Protection
Perhaps the most important consideration when choosing an entity for your new business is liability protection. You need to protect your personal assets. Certain legal entities — LLCs and corporations — offer strong liability protection to their owners. On the other hand, partnerships and sole proprietorships provide much more limited liability protections. It is crucial that you consider your risks when selecting a business entity. Certain types of business operations require significant liability protection. Do not underestimate the importance of liability protection when forming a new business in Ohio.
Tax Consequences
Taxes matter. It is one of the key financial considerations for a company. Different business entities are taxed in different ways. Sole proprietorships, partnerships, and Limited Liability Companies (LLCs) are taxed as pass through entities. On the other hand, corporations are taxed as wholly separate legal entities from their individual owners. If you have questions or concerns about tax considerations, an experienced Ohio business formation lawyer can help you understand your options. Our law firm can help put you and your business partners in the best financial position.
Raising Capital and Future Growth
Finally, it is never too early to begin thinking about the long-term prospects of your business. If you are planning on growing your new business into a large, successful company then you should carefully consider your ability to raise capital. Certain business entities are easier to raise capital (and transfer ownership) than others. As an example, it is generally easier to get investment in a C corporation than an S corporation. The additional complexity that comes with forming a C corporation may be worth it if you need to raise capital from outside investors. Always consider your long-term business objectives when selecting an entity.
Call Our Cortland, OH Business Attorney for Immediate Help
At The Law Office of John C. Grundy, our Ohio business lawyer is committed to providing reliable and cost effective representation to entrepreneurs. If you have questions about forming a new company, we are more than ready to help. To learn more about what our business attorney can do for you, please contact our Cortland law office today. We serve business law clients throughout Northeast Ohio, including in Youngstown, Middlefield, Warren, Columbiana, and Alliance.