Strategic Entity Formation
You supply the talent, ideas, and ambition. We’ll supply the legal guidance to help your startup with formation, IP protection, and growth strategies.
There comes a point for every entrepreneur when turning what started as a hobby into a legitimate business seems like the obvious decision. Less obvious, however, is how to decide what type of business entity is right for your particular venture.
From corporations to LLCs, the choices can seem overwhelming and confusing to those who are new to the business world. Each entity type has its advantages and disadvantages, and what’s right for you will depend on the goals you have for your business. Consulting an advisor who’s well-versed in the tax, liability, and other issues related to entity formation is the best way to ensure that you’re choosing the entity type that best meets your specific needs.
The Pros and Cons of Corporations and LLCs
When you start researching entity formation for your new business, you’ll quickly realize that there are a lot of different entity types out there to choose from. Three of the most common used by emerging business are the traditional corporation, the S-corporation, and the LLC, because they offer a means to limit the owners’ liability for the debts of the company.
Traditional corporations and S-corporations have many similarities, but very different tax implications.
- The traditional corporation (also called a C-corporation) is a separate legal entity owned by shareholders. Each owner’s personal liability for the company’s debts is limited to the amount of money that shareholder invested in the business. C-corporations file and pay taxes at a corporate level, separate from the individual tax returns filed by the owners.
- An S-corporation is an alternate form of the traditional corporation that has opted for a special tax status, which allows company profits and losses to be “passed through” to the owners and reported on individual shareholders’ personal tax return. S-corporations file corporate tax returns, but they don’t pay corporate taxes. Because they are taxed only at the personal level, owners can use the losses of the business to offset other taxable income. In addition to special tax treatment, there are also certain limitations on who can be an owner of an S-corporation that don’t apply to traditional corporations.
Many business owners forego corporations entirely and opt instead to create a limited liability company, or LLC.
- An LLC combines the liability limitations of the corporation with the preferable tax treatment of partnerships. Unlike corporations, LLCs are not taxed at the entity level. Instead, the business profits and losses are reported on the owners’ personal tax returns, and taxes are paid on the individual level.
There are pros and cons to each type of entity. LLCs are not required to follow all of the corporate formalities that are imposed upon corporations, which makes them attractive to many entrepreneurs. S-corporations, on the other hand, offer different advantages, such as the ability to pay yourself a reasonable salary if you so desire.
Which Entity Type Is Right for You?
Understanding the differences between all the various corporate entity options is crucial to choosing the right type of entity for your business. Trying to figure it out on your own will require a lot of homework, and can be a daunting task.
We understand that making business decisions can be stressful for new entrepreneurs. That’s why we’re here to take the stress out of strategic entity formation. We know the ins and outs of the different types of entities, and are dedicated to helping our clients position themselves in the best possible way to succeed. One size doesn’t fit all when it comes to entity formation. We’ll help you make the choice that is right for your unique business.
How we helped vlada
“Gouchev Law has a very unique, hard to find blend of skills that every entrepreneur wants in a law firm: legal acumen, business savvy and a great attitude. Definitely will be working with them as we grow our business!”
Vlada Lotkina, Classtag
the nitty gritty
We know that understanding what legal documents and protections you need is not your jam. Relax: we’ve got you covered.
- Strategic Entity Formation (Corporation, S-Corporation or LLC)
- Customized corporate bylaws and LLC operating agreements
- Founder and Partnership Agreements
- Angel Round Financing
- Crowd Sourced Financing
- Shareholder and Stock Purchase Agreements
- Private Placement Memorandum
- Equity Compensations Review & Negotiation
- Intellectual Property Protection
- Dissolving or Converting Entities
- Separation Agreements
- Confidentiality Agreements
- Commercial Leases
- Buying and Selling a Business
- Joint Venture Agreements
- Loan Promissory Notes
- Independent Contractor, Consulting & Client Service Agreements
- Partner Disputes and Forced Buyouts
Packages to Fit Your Needs
If you’re like most startups, you can’t break the bank on legal fees. Our interest is helping you grow your empire, and so we offer a range of affordable flat-fee packages for startups, beginning with our Entrepreneur Start-Up Package, which includes forming your company, drafting your operating agreement and more. We can custom create a package that is the perfect fit for your startup needs.
Trusted Counsel At Your Side
As your startup grows, we’ll be right there with you, providing continuing counsel to you and your company as you face new opportunities and challenges. Every great journey comes with its fair share of tests and growing pains, but with Gouchev Law at your side, you can face them all. We will help you to create partnerships that maximize your growth while protecting your interests, develop and defend trademarks and patents, and scale your business into new markets.
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