Hearsay: Understanding Its Role in Legal Proceedings
Joshua Stahley, Esq
Business Organizations
You’re finally ready to take the leap. You’ve quit your job, written a business plan, secured some seed money, and are ready to start your own business. No more boss for you. You walk into your bank to open your business checking account and the agent asks you, what type of entity? You say just pick one, why does it matter, I have the million-dollar idea, the golden egg, I’m going to be rich. If that is the case, your choice of entity matters even more.
This article is intended to serve as the first in a series that analyzes and explains the various entity choices available to a nascent business. But before we go through the options, its important to have an understanding of why you need a business organization structure and how it benefits you and your business.
So why use a business organization structure as opposed to just doing it all in your own name? Ill give you five reasons:
1) liability 2) anonymity 3) tax planning 4) financing 5) continuity.
The dreaded lawsuit. Someone falls in your store, chokes on your product. And not the sheriff has served you papers and you are staring down a lawsuit that is asking for numbers that will ruin you. Or are you? Not if you chose the correct type of structure and properly executed the same. One of the biggest reasons behind setting up a formal entity is that most shield the owners from liability arising from the business, meaning your personal assets are off the table. While there are exceptions, and you should consult with an attorney to make sure all of the requirements are met, as a general rule your personal assets are safe from anything that happens with the business.
We all value at least some degree of anonymity for a thousand different reasons. The problem is, our names and information are plastered all over official, public government records, among other places. Well, they don’t have to be. Assets can be placed in a business as a way of shielding you from public exposure, again, so long as the entity is properly structured and executed.
Hate doing your taxes now? Wait until your first year as a business owner. They just got a lot more complicated. Properly choosing and maintaining a compliant purposeful entity choice can save you from the horror of a massive tax bill at the end of the year.
Need money to get your business off the ground or to expand? Lenders are significantly more likely to lend to properly structured entities than individuals. Diving deeper, each of the different forms available to you presents its own opportunities and difficulties depending on what type of financing you are seeking.
Finally, continuity. Try as we might to pretend otherwise, we are mortal, and our lives are finite. The life of a business is not, and a properly structured entity can last long after we are gone, a legacy carrying on our name.
Chairman, CEO, & Managing Director of Legal Services
The Law Offices of Joshua M. Stahley, P.A
We are a boutique law firm combining the breadth of practice and knowledge one would expect from a large global law firm with the personal, white glove, touch our clients love and that we proudly own as our hallmark. Our team stands ready to advise and provide counsel on matters ranging from car accidents to international tax controversies, divorce to estate planning, and everything in between.
