OVERVIEW OF BUSINESS ENTITIES AND OWNERSHIP STRUCTURES by Keith Dunnagan, BPE Law co-managing attorney and chair of our Commercial Practices Group.
For those of you who were unable to attend, on April 15, 2016, BPE’s co-managing attorney and chair of the commercial transaction practice, Keith Dunnagan taught a class at SAR’s Broker’s Training Institute on Business Entities and how professionals are using various ownership forms in their business structures. The most common of these are:
(3) Limited Liability Companies (LLC’s)
(4) Blended Entities (my term to describe business structures employing a combination of entities to operate a business)
Over the next several weeks this blog series will be focused the various entity structures available and from a high level view how they could work for you.
Most business owners at some point in the life cycle of their business will employ multiple business structures in which they operate their business for profit. Some may start as sole proprietors and as they become more successful decide to incorporate or form an LLC. Some start as a partnership and convert to a corporation. Or any iteration of a business structure that may solve anticipated problems.
Choosing a business structure is one of the most important aspects of the business. The business structure forms the skeleton of how a business is going to operate, govern its operation, and determines the tax structure for the business. All of these work together to form the basis of how a business will conduct its enterprise going forward. There are several different entity options available to a business owner and each has its own set of pros and cons.
The business owner may be interested in the fluidity and pass through tax benefits of a sole proprietorship or a partnership. Maybe the business owner is concerned about the liability protection afforded by an S-Corporation. Or maybe the business owner is looking at the liability and tax benefits provided by an LLC. Maybe the business is a professional practice looking to combine a partnership and a corporate structure to create liability and tax benefits. What ever the business — the selection of a business structure that fits the business owner’s model and goals is one of the most important steps taken to establish the business.
This series of articles is going to walk you through the practical basics of general and limited partnerships, limited liability companies, corporations and blended entities, but will not be covering non-profit corporations, social purpose or mutual benefit corporations. Not every business uses the same model and there is no such thing as the universal best option. Entity selection is predicated on the goals and desires of each business owner.
The attorneys at BPE have counseled hundreds of business owners on entity selection. Navigating the complex world of business structures can be overwhelming for the business owners, the attorneys at BPE are here to partner with you on deciphering the business structure world and to assist you structuring an entity that works for your business. If you have any further questions, please feel free to contact me at firstname.lastname@example.org or, if you need help now, please call our office at (916) 966-2260 to set up a consultation.
This article is not intended to be legal advice, and should not be taken as legal advice. Every case requires review of specific facts and history, and a formal agreement for service. Please feel free to contact us if you need legal advice and are interested in seeing if we can help you.