The business attorneys at Aidenbaum Schloff and Bloom PLLC know how important choosing the appropriate business structure can be for a new enterprise. The Aidenbaum team frequently assists clients in selecting and forming the correct business type to meet their needs and objectives. When forming a new business entity, there are a myriad of considerations, including how much liability an individual is willing to accept and the tax implications of each particular form of business entity. Our attorneys can simplify the process of starting a business in an efficient and cost-effective manner. Below is a brief overview of the most common business types.
Under Michigan law, a partnership is an association of 2 or more persons who carry on as co-owners of a business for profit. Partnerships are usually governed by a partnership agreement. Each partner is generally liable for the wrongdoing of its co-partners and the partners are jointly liable for the debts of the partnership. The partnership itself is not taxed. The profits and losses are considered to pass through the partnership to the individual partners who are responsible for the applicable taxes.
Limited Liability Company (LLC)
A limited liability company (LLC) is a very popular business form because it combines the limited liability of a corporation with the tax advantages of a partnership. Unless the principals abuse the company and use it as an alter ego, the principals of the LLC are not individually liable for the debts or wrongdoing of the company. An operating agreement typically governs the management of an LLC. As compared to a corporation, there are fewer formalities involved in operating an LLC.
A C corporation is formed through articles of incorporation and operates according to its bylaws. Such corporations have legal identities that are distinct from that of their individual shareholders and, thus, shareholder liability for debts or wrongdoing of the corporation is limited. This independent legal identity is maintained by operating the corporation in accordance with various corporate formalities. Corporations are subject to “double taxation” in that both the corporation and its shareholders must pay taxes on their income.
An S Corporation is very similar to a C Corporation. It must be operated in accordance with the formalities associated with operating as a C corporation and it limits the liability of its shareholders. The primary difference between an S Corporation and C Corporation is that an S Corporation is treated differently for tax purposes.
There are many business forms available and our attorneys have a thorough understanding of the advantages and disadvantages of each. We can assist you in setting up a new business in an affordable and efficient manner. We also handle commercial debt collection, export compliance, intellectual property registration and protection, and commercial and residential real estate matters.
How to Start a Business Michigan, Starting a Business Detroit, Michigan Business Law Firm, Business Licenses | Business Licensing, How to Incorporate, Corporate Formation, Forming an LLC in Michigan Business Types Michigan, Business Start Up Detroit Michigan, Business Structures Detroit Michigan,