What Are The Benefits Of Starting My Own Small Business?
Starting your own business is in fact the American dream. It’s the active statement of your desire for financial independence; a desire for financial upward mobility and a way to deliver services you deem are important to your fellow man.
What Are The Most Common Risks Associated With Starting A Small Business?
Most business fail because they don’t literally make a plan on how to succeed. There are many books and resources out here, but the risk is getting the wrong information. You should always seek expert advice whenever setting out to start a business. There are so many pitfalls, such as personal liability, contract disputes, regulations, licensing both federal and state; tax implications, laws that effect employees and employers as well.
What Are The Different Types Of Small Business Entities?
There are many type of small business entities. They are Schedule C corporations, Family Limited Partnerships, Limited Liability Companies, Partnerships, sole proprietors, etc.
What Are The Advantages And Disadvantages Of Each?
Each entity has its advantages and disadvantages:
Sole Proprietor: Is a person just engaging in a business but has no specific entity protection. That person has personal liability on the business and on his income made from the business.
Partnerships: is when two or more people form a business for profit. The same liability as sole proprietor but extended liability to the other partners’ even if the partners played no part in incurring the liability. There may be some tax advantages a partnership agreement. Check with your tax advisor before choosing this business entity.
Family Limited Partnerships: The same structure as partnerships but normally used in terms of preservation of wealth or better known uses are in asset protection. The benefit is that certain income can be deferred by transferring it to lesser earning partner (family member) and incurring less tax on that transferred income.
Limited Liability Companies (LLC): This is the newer and probably most misunderstood entity. It is a hybrid of the Limited Partnership and the Corporation. The advantage can be personal protection, but it is not a complete protection in that respect. The LLC is considered a disregarded entity in terms of the IRS and creditors can reach the personal assets of the LLC owners. In most states, there’s a one-time fee for setting it up, and no other requirements are needed. The best use of an LLC in our opinion is for estate planning and not the operation of a business without a more comprehensive plan and legal advice.
Corporations: In our opinion is the favored choice of entity. There are many advantages such as limited liability, tax advantages, unlimited medical deduction potential, and write-off for business use. A corporation can own other entities and become holding companies for a myriad of business ventures. In terms of the courts and case law, most issues are well settled and therefore predictable navigational waters legally. The IRS eye these entities more favorably than the others. Corporation create jobs and many more tax paying citizens. The disadvantage is that annual meeting must be held and annual report filed with the State.
How Do You Advise Clients Looking To Start Their Own Small Business?
We advise clients on all matters related to small businesses. To see their hopes and dreams come together in some tangible form for them to act on is priceless. They are the “today’s dreamers” for tomorrow and I’m delighted to be a part of that dream.
For more information on Small Businesses In Missouri, a free initial consultation is your next best step. Get the information and legal answers you are seeking by calling (314) 786-3536 today.
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