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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.
Here is an article that describes business formation services.
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.
Sole Proprietorship
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.
Partnerships
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.
Corporation
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
Rosario A.
I'm a Washington-licensed lawyer specializing in trademark practice and with an extensive trademark education and academic background. I currently work with domestic and international businesses seeking trademark protection in the U.S. by conducting trademark searches, providing legal advice, submitting USPTO applications, and preparing responses to office actions. I'm passionate about trademark law and always looking forward to helping small and medium businesses promote their value by having a registered federal trademark. If you have questions or concerns about trademark/copyright/IP licensing and require legal advice, feel free to contact me and we can have a first chat.
Diana M.
Diana is a registered patent attorney and licensed to practice law in Florida and in federal courts in Florida and in Texas. For nearly a decade, Diana has been known as the go-to brand builder, business protector, and rights negotiator. Diana works with individual inventors, startups, and small to medium-sized closely held business entities to build, protect, and leverage a robust intellectual property portfolio comprising patents, trademarks, copyrights, trade dress, and trade secrets.
Maxwell L.
Firm rated best ADR firm for Wisconsin and won an award for cultural innovation in dispute resolution from acquisition international magazine in 2016 and it was rated "Best of Brookfield" by Best Businesses in 2015. Attorney Maxwell C. Livingston was rated 10 best in Labor & Employment Law by American Institute of Legal Counsel and 40 Under 40 by American Society of Legal Advocates for 2016; he also won 10 Best by American Institute of Family Law Attorneys. He is licensed in Wisconsin in all state and federal courts, and in the 7th Circuit Court of Appeals, wherein he won a landmark decision in McCray v. Wielke.
Anatalia S.
High quality work product at affordable prices.
Blake L.
I am a sole practitioner who has been in practice for over 25 years. I have represented many small businesses during this time. Let me bring my expertise to your business.
August 24, 2020
Jeffrey P.
Mr. Pomeranz serves as the principal of Pomeranz Law PLLC, a boutique law firm representing clients across myriad industries and verticals. Before founding the firm, Mr. Pomeranz served as Senior Vice President, Legal & Compliance and General Counsel of Mortgage Connect, LP in 2017. Mr. Pomeranz also served as Counsel, Transactions for Altisource Portfolio Solutions S.A. (NASDAQ: ASPS) beginning in 2013, and was based in the company’s C-Suite in Luxembourg City, Luxembourg. Mr. Pomeranz began his career with Mainline Information Systems, Inc. as an in-house attorney.
August 25, 2020
Rinky P.
Rinky S. Parwani began her career practicing law in Beverly Hills, California handling high profile complex litigation and entertainment law matters. Later, her practice turned transactional to Lake Tahoe, California with a focus on business startups, trademarks, real estate resort development and government law. After leaving California, she also served as in-house counsel for a major lending corporation headquartered in Des Moines, Iowa as well as a Senior Vice President of Compliance for a fortune 500 mortgage operation in Dallas, Texas prior to opening Parwani Law, P.A. in Tampa, Florida. She has represented various sophisticated individual, government and corporate clients and counseled in a variety of litigation and corporate matters throughout her career. Ms. Parwani also has prior experience with state and federal consumer lending laws for unsecured credit cards, revolving credit, secured loans, retail credit, sales finance and mortgage loans. She also has served as a special magistrate and legal counsel for numerous Florida County Value Adjustment Boards. Her practice varies significantly from unique federal and state litigation cases to transactional matters. Born and raised in Des Moines, Iowa, Ms. Parwani worked in private accounting for several years prior to law school. Her background includes a Certified Public Accountant (CPA) certificate from Iowa (currently the license is inactive) and a Certified Management Accountant (CMA) designation (currently the designation is inactive). Ms. Parwani or the firm is currently a member of the following organizations: Hillsborough County Bar Association, American Bar Association, Tampa Bay Bankruptcy Bar Association, National Association of Consumer Bankruptcy Attorneys, and the American Immigration Lawyers Association. She is a Fellow of the American Bar Association. Ms. Parwani is a frequent volunteer for Fox Channel 13 Tampa Bay Ask-A-Lawyer. She has published an article entitled "Advising Your Client in Foreclosure" in the Stetson Law Review, Volume 41, No. 3, Spring 2012 Foreclosure Symposium Edition. She is a frequent continuing legal education speaker and has also taught bankruptcy seminars for the American Bar Association and Amstar Litigation. She was commissioned by the Governor of Kentucky as a Kentucky Colonel. In addition, she teaches Immigration Law, Bankruptcy Law and Legal Research and Writing as an adjunct faculty instructor at the Hillsborough Community College Ybor campus in the paralegal studies program.
September 2, 2020
Nicole R.
Full-service boutique law firm providing personalized services in business law, trademarks, and real estate closings/title work.
September 2, 2020
Maury B.
Respected, driven, ethical, and high energy legal and business professional with strong focus on litigation, contracts and compliance issues. Critical management experience includes client development, developing core initiatives, and forecasting risk in major corporations. Strong legal research, analytical and problem solving skills with demonstrated adaptability in a multifaceted legal practice including delivering high value results in a Fortune 10 environment. Core competencies include: Tactical and strategic legal direction and support to clients which includes contract negotiation, drafting and review, business planning, and a passion for relationship management. Excellent legal research, writing, analytical and problem solving skills including legal training and compliance with regulatory requirements and corporate policies. Coordinates with in-house legal and business resources for team building with excellent verbal communication skills, coaching, and leadership.
October 1, 2020
Brandon L.
Brandon is a Texas Super Lawyer®, meaning he is among the top 2.5% of attorneys in his state. He has designed his practice to provide a unique ecosystem of legal support services to business and entrepreneurs, derived from his background as a federal district law clerk, published biochemist, and industry lecturer. Brandon is fluent in Spanish, an Eagle Scout, and actively involved with the youth in his community. He loves advocating for his clients and thinks he may never choose to retire.
October 1, 2020
Richard E.
Richard is a wizard at taking on bureaucracies and simply getting the job done. His clients value his straight-forward counsel and his ability to leverage a top-notch legal staff for efficient and effective results. Richard is a professional engineer, professor of law, and has been named among the top 2.5% of attorneys in Texas by the Super Lawyers®. When he is not driving results for his clients, Richard can be found with his small herd on his Texas homestead.
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