What Are Business Formation Services?
Business formation services assist you in incorporating your business. They help choose what structure best suits your business. They also help ensure the newly established business is legally compliant and starts in a good economic state.
Whether you’re a sole proprietor, an S Corp, a C Corp, a partnership, or an LLC, business formation services will ensure that your needs are met.
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What Do Business Formation Services Include?
Business formation services can do diverse tasks to expedite the business formation process. Here are some of the tasks that they’ll take off your plate:
- Filing and organizing your business incorporation paperwork. This may include your business formation certificate and Employer Identification Number (EIN).
- Filing your identity verification and other documents for due diligence.
- Ensuring all formation documents are error-free.
- Securing your Certificate of Good Standing and Tax Residence Certificates.
- Checking for required fees and other additional payments.
- Setting you up with registered agents to respond to requests for government fees, taxes, and legal responsibilities.
- Finding and choosing available business names.
- Guiding you through choosing the right business structure.
Here is an article on business formation services.
4 Types of Company Formation
There are four main structures in which you can establish a business: sole proprietorships, partnerships, corporations, and LLCs.
In sole proprietorships, you make all business decisions and are in complete control. However, you are also entirely liable for all issues incurred in the business.
Your business and personal assets are similar, so they are similarly put at risk when things go south. Moreover, you are the one to pay taxes for the revenue that your business earns personally. This is called a “ pass-through entity ” taxation system.
In a general partnership, two or more individuals join forces to provide the capital and operating needs for the business.
Two types of partners can participate. General partners are the ones who make all the business decisions. They have “personal liability”, meaning they risk their assets if the partnership gets sued or incurs debt.
Limited partners, on the other hand, do not make decisions for the business. Their responsibility is merely to provide capital for the business. They do not have personal liability, so all their assets are protected if problems arise.
Regarding taxation, partners are each taxed on the individual revenue they earn in the business.
A corporation is owned and controlled by shareholders to turn a profit (excluding non-profit corporations). However, it is considered a legal entity separate from its owners. Because of this, the business will be taxed as a separate entity.
However, there is double taxation in corporations. This means the corporation will be taxed for its profits, and the shareholders will be personally taxed for their shares.
Corporations have “limited liability”. Therefore, any liability incurred in the business will be paid for by the corporation’s assets and not by the shareholders.
Limited Liability Company (LLC)
Multiple “members own a limited liability company”. These members are not liable for other members’ problems in the business, and their assets remain protected. LLCs also have pass-through taxation so that each member will be personally taxed for their respective profits in the business.
Here is an article to read more on the 4 types of company formation.
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Is LLC Formation the Best Option?
LLC formation is one of the most common business structures in the US. This is not surprising because LLCs combine the best qualities of sole proprietorships, partnerships, and corporations. Here are the notable advantages of LLCs:
- Like sole proprietorships, LLCs are relatively easy to form as they do not require much paperwork or complex board structures.
- Similar to corporations, LLCs offer liability protection to their members, so they won’t have to risk their assets in case of bankruptcy.
- LLCs are taxed like partnerships so that profits can go directly to each individual member. Therefore, there is no double taxation like in corporations. This means that the LLC will not be taxed as a separate entity, and only its individual members will be taxed.
- LLCs rules are also highly flexible. Their flexibility mostly comes from the fact that their governing rules are not as strict as those of corporations. As a result, their operating agreement can be modified anytime should their structure need changes.
- LLCs have management flexibility. Their members are the ones to do the dailies. There is no need for a board of directors with regular meetings. Recording of financial transactions is not subject to as strict requirements.
However, LLCs are not without their disadvantages.
- Some states disallow groups from the professional sector (lawyers, doctors, engineers, accountants, etc.) to form an LLC.
- LLCs ownerships are more complex to transfer than corporations. Unlike corporations, where they simply sell stock to new shareholders, all members in an LLC must agree before a new member can enter.
- Unlike corporations, LLCs cannot exist as a sole entity. This is highly relevant in single-member LLCs, where the LLC will be dissolved if the member dies or becomes bankrupt.
Here is an article to consider whether an LLC is the proper business structure for you.
What Does a Business Formation Attorney Do?
A business formation attorney helps you with the critical aspects of starting a business. Here are some of the things they do:
- Outline information on taxes, regulation fees, and business liabilities for your understanding
- Draft legal documents needed like bylaws, agreements, and registrations
- Obtain required licenses and permits to incorporate your business
- Check available entity names for you to choose from
- Deal with the task of registering your chosen business name
Here is an article outlining what a business formation attorney does.
Should I Hire a Lawyer for Business Formation?
You should hire a business formation attorney to get your business approved faster. These lawyers are up to date with current business laws and regulations in the state and federal government. Their expert guidance in business formation will minimize errors that will cause you to get rejected.
The cost of a business formation attorney outweighs the benefits you save by helping you focus on your business. At ContractsCounsel, we can connect you with the business formation attorney required to meet your needs.
Here is an article on whether you should hire a lawyer for business formation.
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Meet some of our Business Formation Services Lawyers
November 19, 2022
Ferraro Law Firm was founded by Dean C. Ferraro. Dean earned his Bachelor's Degree from California State Polytechnic University, Pomona ("Cal Poly Pomona") in 1992 and his J.D. Degree from the University of Mississippi School of Law ("Ole Miss") in 1996. He is licensed to practice law in the State Courts of Colorado, Tennessee, and California. Dean is also admitted to practice before the United States District Courts of Colorado (District of Colorado), California (Central District), and Tennessee (Eastern District). Shortly after earning his law license and working for a private law firm, Dean joined the District Attorney's office, where he worked for five successful years as one of the leading prosecuting attorneys in the State of Tennessee. After seven years of practicing law in Tennessee, Dean moved back to his birth state and practiced law in California from 2003-2015. In 2015, Dean moved with his family to Colorado, practicing law in beautiful Castle Rock, where he is recognized as a highly-effective attorney, well-versed in many areas of law. Dean's career has entailed practicing multiple areas of law, including civil litigation with a large law firm, prosecuting criminal cases as an Assistant District Attorney, In-House Counsel for Safeco Insurance, and as the founding member of an online law group that helped thousands of people get affordable legal services. Pursuing his passion for helping others, Dean now utilizes his legal and entrepreneurial experience to help his clients in their personal and business lives. Dean is also a bestselling author of two legal thrillers, Murder in Santa Barbara and Murder in Vail. He currently is working on his next legal thriller, The Grove Conspiracy, set to be published in 2023.
December 2, 2022
Jason is a self-starting, go-getting lawyer who takes a pragmatic approach to helping his clients. He co-founded Fortify Law because he was not satisfied with the traditional approach to providing legal services. He firmly believes that legal costs should be predictable, transparent and value-driven. Jason’s entrepreneurial mindset enables him to better understand his clients’ needs. His first taste of entrepreneurship came from an early age when he helped manage his family’s small free range cattle farm. Every morning, before school, he would deliver hay to a herd of 50 hungry cows. In addition, he was responsible for sweeping "the shop" at his parent's 40-employee HVAC business. Before becoming a lawyer, he clerked at the Lewis & Clark Small Business Legal Clinic where he handled a diverse range of legal issues including establishing new businesses, registering trademarks, and drafting contracts. He also spent time working with the in-house team at adidas® where, among other things, he reviewed and negotiated complex agreements and created training materials for employees. He also previously worked with Meriwether Group, a Portland-based business consulting firm focused on accelerating the growth of disruptive consumer brands and facilitating founder exits. These experiences have enabled Jason to not only understand the unique legal hurdles that can threaten a business, but also help position them for growth. Jason's practice focuses on Business and Intellectual Property Law, including: -Reviewing and negotiating contracts -Resolving internal corporate disputes -Creating employment and HR policies -Registering and protecting intellectual property -Forming new businesses and subsidiaries -Facilitating Business mergers, acquisitions, and exit strategies -Conducting international business transactions In his free time, Jason is an adventure junkie and gear-head. He especially enjoys backpacking, kayaking, and snowboarding. He is also a technology enthusiast, craft beer connoisseur, and avid soccer player.
December 16, 2022
Accident and injury attorney. Prior to going to law school I was a paralegal for 12+ years primarily in personal injury. I also worked for a local school district as the Risk Manager and a Buyer in Procurement where I facilitated solicitations and managed all the contracts for the district.
December 8, 2022
20 years experienced attorney, Corp/commercial RE/wills trusts/ contracts/ reg compliance
November 3, 2022
Founder David W. Weygandt, the Singing Lawyer, is passionate about helping families and businesses stay in tune with what they care about and avoid conflict. When injustice has been done, David is proud to stand up to the modern Goliath and vindicate your rights on your behalf. David lives and practices law in The Woodlands, Texas, and assists clients all across Texas.
November 28, 2022
Ben Prell is a “business concern” lawyer. Whether a legal issue or concern could develop into a dispute, or already has, he stands ready to advise, assist, and advocate for his clients. Over more than 20 years of practice, Ben has represented clients in all manner of business disputes. He has handled matters that include business ownership and control disputes, non-competition agreements, contract breaches, employment disputes, securities fraud, misappropriation of trade secrets, and intellectual property infringement. Ben provides advice and counsel to businesses regarding litigation and regulatory risk management, compliance with federal regulations, and contract negotiation, revisions and updates. Ben’s recent work includes the successful resolution of cases involving the defense of C-Level executives who became embroiled in larger disputes with their company’s buyers or creditors and the disputed ownership and control of multiple businesses. He has also served as counsel for court-appointed receivers, brought wrongful termination and compensation claims by executives and minority shareholders and addressed securities fraud claims, a partnership claim related to the development of a cellulosic ethanol plant, and a contract dispute involving information technology services. His efforts on behalf of his clients led to his recognition as one of Kansas and Missouri’s Rising Stars by Super Lawyers®.
November 29, 2022
Ari is a transactional attorney with substantial experience serving clients in regulated industries. He has worked extensively with companies in regulated state cannabis markets on developing governance documents (LLC operating agreements, corporate bylaws, etc...), as well as drafting and negotiating all manner of business and real estate contracts.
December 3, 2022
I am the Founding Member of Evan Ficaj Law Firm PLLC, and I am passionate about helping businesses launch, grow, and succeed. My law firm assists clients with business, contract, entertainment, IP, and estate planning matters.
December 6, 2022
We are business and immigration attorneys, committed to delivering compassion-driven and innovative legal solutions that better our clients' lives. Founded in 2019, Carbone Law provides legal services tailored to the unique needs of our clients. We pride ourselves in building a personable attorney-client relationship and are dedicated to establishing a complete understanding of our client’s legal issues, so that we can develop an effective plan for achieving their desired results. Michael T. Carbone, Esq. started Carbone Law with the goal of delivering exceptional legal services to his community. At Carbone Law, Michael counsels individuals and small businesses on a variety of legal issues. Whether aiding families in building successful applications for immigration benefits or advising freelancers and business owners on contract, governance and related issues and the complexities of complying with federal, state and local laws, Michael is committed to building a lasting relationship with his clients.
December 6, 2022
New York Business law attorney with corporate, securities and contracts experience.
December 28, 2022
A. Browne Esq. is an entertainment, intellectual property, and business lawyer. Her goal is always to provide the best legal representation for your creative endeavors, both tangible and intangible. Always know that the best way to deal with legal issues is to take measures to avoid them. Learn how to protect your creative work at a law firm that’s passionate about ensuring that creatives own their stuff.