Making the decision to start a company for your new idea is often a major moment in a person’s life, and the first step in this process can dictate the level of success that your new idea will have. Picking the right business entity in Missouri is critical to the success or failure of many new ventures, and the experienced business law attorneys at the Johnson Law Firm are here to help. If you have a new idea for a company in the St. Louis area and would like advice on what entity type is right for you, talk to our office today.
Sole Proprietorship
A sole proprietorship is the simplest type of business entity and appropriate when there is a single owner of the company. There is no need to register a sole proprietorship with the state, and the owner can deduct business losses on their personal tax return. However, the owner is also personally liable for the company’s debts and other liabilities.
General Partnership
A general partnership has two or more owners of the business, where the partners all actively share in the profits and losses of the company as well as actively manage the business. Owners do not need to register a general partnership with the state, and business losses can also be deducted on personal tax returns. Owners are still personally liable for the company’s debts and liabilities, but they are split between partners.
Limited Partnership
A limited partnership has two or more owners of the business, but some are general partners while others are limited partners. General partners manage the company and assume liability for the business, while limited partners are silent investors who are only liable up to their level of investment. Limited partners can leave without dissolving the business, but this type of entity does require state filing.
Limited Liability Company
A limited liability company offers some liability protections for owners and gives the business owner the option to be taxed like a partnership or a corporation. They require less formalities than a corporation but do still require registration with the state. Many people like limited liability companies because they provide the ease of a sole proprietorship or partnership with the legal protections of a corporation.
Corporation
Finally, a corporation is considered a separate legal entity from the company’s owners, who are called shareholders. The business is managed by a Board of Directors, and the requirements for establishing this type of entity are the most complex. However, owners do not have any personal liability for the company’s debts and corporations are eligible for more types of tax deductions than other types of entities.
Talk to the Johnson Law Firm Today
Do you have more questions about the right business entity in Missouri is for your new idea or would like assistance establishing your new company? The Johnson Law Firm provides a wide range of legal services for our business clients and are here to help. Call the office or contact us today to schedule a consultation.
