Business Law

Small businesses come in a variety of different flavors- sole proprietorships, corporations, partnerships, LLCs, and others.  The laws and regulations governing the operation of a small business vary from state to state, and from county to county within each state.

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It also varies depending upon the type of business- for example, some businesses require a license, while others do not. Here you will find an explanation of how each type of business entity operates, together with the rights, duties, and obligations of each officer, director, and shareholder.

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A sole proprietorship (also known as a “Mom and Pop”) is a business that it is owned and managed by one person. If more than one person becomes involved in the ownership and management of the business, it ceases to be a sole proprietorship and becomes either a partnership or a joint venture, depending on the nature of the enterprise. Learn more about sole proprietorships.  

A partnership is the simplest and most flexible form of conducting a multi person business.  Partnerships also enjoy significant income tax advantages over corporations for most small business participants.  Lean more about partnerships…

A corporation is an official and regulated business entity- it is an artificial “person” that is recognized by the law.  Like real people, corporations have certain rights.  One of the best aspects of operating your business as a corporation is the fact that they protect their owners against personal liability for the debts of the business.   This is called “limited liability.”  However, a shareholder can only take advantage of limited liability if the corporation is run correctly.  You’ll need to keep good records to handle the more complicated corporate tax return and, in order to retain your limited liability, you must follow corporate formalities involving decision making and record keeping.  Learn more about corporations… 

LLC is short for “Limited Liability Company.”  It is a business structure that combines some of the best aspects of a corporations, partnerships, and sole proprietorships.

Like owners of partnerships or sole proprietorships, LLC owners report business profits or losses on their personal income tax returns; the LLC itself is not a separate taxable entity. Like owners of a corporation, however, all LLC owners are protected from personal liability for business debts and claims — a feature known as “limited liability.” This means that if the business owes money or faces a lawsuit, only the assets of the business itself are at risk.  Learn more about LLCs…