Business Law – What Business Formation Options Are The Best?
- An LLC is the most common form of ownership nowadays and it offers is the same protection that you’ll have if you own something in a corporate name and again, owning something in a corporate name as opposed to an individual name insulates you from any individual or personal liability.
- If there is any sort of claim, lawsuit, or problem arises with respect to that business the only liability rests on the corporation unless there is some kind of gross fraud or criminal actions; in which case a defrauded party or creditor some kind is called “pierced the corporate veil”.
- The problem with corporate ownership is that there are fees and taxes involved. You have to pay corporation taxes, franchise taxes, accountant fees, there is a lot of paper work involved and you pay taxes at a higher rate as a corporation than you do as an individual.
- With the advent of the LLC, they have allowed an individual to own businesses and property in that LLC and pay taxes at an individual rate, so you are paying lower taxes yet it offers you the same protection at a corporation ownership does. That is the most sensible way to own a business in my opinion now.
- There are also individual people and they form a name, “Joe’s Pizza Shop”, so you can file a certificate of authority or a business certificate in the county and allow yourself to do business under that name. It is neither a corporation nor an LLC, but yet the individual could be held responsible; it’s called an assumed name and you are not shielded from personal liability.
This short informational legal video was provided by Arnold Drucker, an experienced Jackson Heights Business Lawyer.