Corporations & Limited Liability Companies
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New and existing businesses should adopt a business entity that supports the goals of the business while sheltering owners from lawsuits and legal claims.
Besides self-proprietorships, the three most commonly used business entities are:
- Limited partnerships
- Limited liability companies
The Benefits of Different Business Structures
From a tax standpoint there is very little difference between business entities. However, each has distinct advantages. For example a limited liability company (LLC) is less formal than a corporation and, unlike a corporation, the percentage of income received by a member can differ from that member's percentage of ownership.
As a general rule, the owner of one of these entities is not legally liable for claims and lawsuits against the entity. However, the member/owner is responsible for his or her own negligent acts or fraud, and he or she also is liable for loans to the business that he or she personally guaranteed.
In terms of asset protection, a family limited partnership (FLP) and a limited liability company (LLC) afford more protection from lawsuits against the owner/member. The reason for this is that a creditor of an FLP partner or LLC member is only entitled to seize on distributions made by the FLP or LLC. In contrast, a creditor can levy on a shareholder's interest and may be able to sell the shares or force the corporation to buy the shares.
Need Guidance with Setting Up or Restructuring a Business Entity?
Whether you are just beginning a business venture or have an eye to the future protection of your assets, it is essential that the type of business entity that you select is congruent with your estate planning goals and supports the goals of the business. Seeking the advice of your accountant and a qualified business attorney provides you with the information that you need to select the business entity that fits your objectives.
Our team at the James A. Littlepage Law Offices can evaluate your situation to help you choose the structure that best meets your unique needs. A former CEO, Mr. Littlepage has the knowledge and expertise to assist you in establishing a business entity that fulfills your goals and objectives. To learn more about our outstanding legal services, read what our clients say about us.
For assistance with the formation or restructuring of a corporation or limited liability company, contact the Denver estate planning attorney at 303.756.5808; don't hesitate to call us at your earliest convenience!