You’ve molded your idea into a product or service. Now it’s time to make things legit. Next step? Formally register a business. But which category should you choose? Which one will allow for the most profit potential and liability coverage?
The decision will dictate your company’s operations and obligations.
The best thing to do is work with a startup lawyer. We can review your business plan and advise on the best route for your operation. A full-service, Illinois-based firm, our team handles everything from tax positioning to international Internet law compliance. In short: We’re a fantastic legal fit for Chicago startups.
But enough selling (no really, contact us!), let’s break down some business categories.
Chicago Startup: Sole Proprietorship
If you’re a one-person band without much — if any — investment capital lying around, then a sole proprietorship may be the best option. It’s just as it sounds, the “sole” (i.e., you) person who owns and runs the business is responsible for all debts and reaps all profits.
Pro: You are 100 percent in control of everything.
Con: You cannot separate personal and professional assets and expenses.
Chicago Startup: General or Limited Liability Partnership
There are two main partnership categories: general and limited liability. When two or more people are running a company, partnerships are a popular choice. General partners share everything equally; limited partnerships typically involve agreements wherein one party controls operational aspects, while the other shares in the profits.
Pro: Gives both parties legal authority over a burgeoning business.
Con: All signatory parties can be held responsible for their partners’ actions and decisions.
Chicago Startup: Limited Liability Companies (LLCs)
If you want to mitigate liability obligations, your best bet may be an LLC or limited liability company. LLCs can be small or large and accommodate shareholders, partners, and other invested parties. Think of it as a hybrid between a partnership and a corporation.
Pro: Participants aren’t personally responsible for covering business debts. If the business fails, you won’t have to sell your house to cover company-related business obligations. (Liability protection high-tails it out the window, however, if a court decides that a party was complicit in fraud or other business-related crimes.)
Con: Problems in LLCs usually arise when there is a partnership conflict, which is why it’s wise to have an air-tight, detailed, custom agreement drawn up by an experienced attorney.
Chicago Startup: Corporations
Corporations are entities unto themselves. They exist entirely separate from the owners. Corporations have their own legal rights; they can be sued and sell property, just like individuals. There are several different classes of corporations; to figure out which best fits your needs, consult with a startup lawyer.
Pro: Except in the case of intentional malfeasance, your personal and professional liabilities are separate.
Con: Executives are subject to shareholder obligations and board oversight.
Connect With A Chicago Startup Lawyer
Our ranks include attorneys and accountants who can handle everything from tax positioning to FTC compliance and defense. Need a partnership agreement drawn up? We can do that. Curious about keeping some profits offshore? We’ll guide you through the process while keeping you compliant. Want to make sure your marketing campaign isn’t going to attract a crippling fine? Yep, we’ve got your back on that as well.
The best way to determine if we’re the right Chicago startup law firm for you is to call. We’ll chat and go over your needs. If it’s a match, great; we’ll get to work! If not, we’ll point you in the direction of another firm that may work better.
Give us a buzz. We’re here and ready to answer your questions.