Selecting a Legal Entity for Your Business: Part One: The Sole Proprietorship
When starting or expanding a business, you should make a strategic decision about which form of business entity to use. As a business lawyer Memphis, TN trusts, we can help guide you in selecting the most advantageous form of legal business entity. The decision involves legal counseling on many practical and legal considerations.
The most important issues include, but are not limited to, the cost to establish and maintain the entity, taxation of the entity, continuity of existence, ability to transfer ownership interests, management, control and vulnerability to personal liability.
In general, the available forms for a business entity include sole proprietorship, general partnership, limited partnership, limited liability company, and corporation. The choice of entity and the best ownership structure within the entity often involves a variety of factors specific to a particular business, and you should consult an experienced business lawyer.
In this post, we will focus on the Sole Proprietorship.
The sole proprietorship is the simplest form of business entity. It is owned and managed by one person. The individual owner has the ultimate responsibility and authority for all decisions affecting the business and is personally liable for the debts and liabilities of the sole proprietorship. As a business lawyer, there are no legal formalities required to create a sole proprietorship.
What Happens When a Sole Proprietor Dies?
A sole proprietorship ends at the death of the individual owner. Estate planning documents for the sole proprietor may grant heirs the right to continue the business. Since a sole proprietor owns the business directly, the ownership interest may be transferred at any time, and all business income or loss is treated as the individual owner’s income or loss and taxed on his individual income tax return.
If you need help with setting up your business, contact the trusted business lawyer.
Thanks to our friends and contributors at Patterson Bray who have significant experience in business formation and organization.
Posted on November 29, 2016 @ 6:43 pm