Business Attorney in Summerville

Helping Clients Build Their Businesses in Berkeley, Charleston, and Dorchester Counties

Many people have a great idea for a business but are not sure how to get started. Others have built burgeoning enterprises but struggle to grow or legally protect them, especially as they begin to conduct business with other entities. Attempting to navigate, start, or grow a business without the help of a qualified lawyer can lead to mistakes with devastating results.

You do not need to go it alone. At PMC Law Firm, our Summerville business attorney can help you determine what business type best suits your goals or help make sure your existing business is protected in every transaction.

To schedule a consultation, call (800) 914-0620 or contact us online.

Choosing a Business Entity Type

There are several types of business entities when forming your business, each with its own advantages and disadvantages. As a business owner, it is wise to consider the following factors:

• Tax efficiency
• Limited liability
• Ease of management

In addition, you will want to think about filing costs, whether the entity requires an Employer Identification Number (EIN), and any necessary business certificates or licenses. As your business grows and metastasizes, you may want or need to change your entity type. Our lawyer can help you evaluate the specifics of your business and help you decide what entity makes the most sense for you. Below, we cover some of the major entity categories.

Sole Proprietorships and General Partnerships

These are arguably the simplest types of business and are not really entities at all. They lack many of the advantages of more formalized institutions, including limited liability. A sole proprietorship is defined as an individual running a business without any formal organization, meaning the business’s profits and losses are reflected in their personal tax returns. This gives them tremendous flexibility and discretion in how they run their business, but they are also exposed to any of its liabilities.

General partnerships are similar in that they have no formal organization. They encapsulate scenarios where two or more individuals work together on a for-profit business. What can be tricky here is there does not need to be a formal agreement specifying the participants in the business are partners; in fact, even a written agreement specifying individuals are not partners in a business does not legally absolve them of running a general partnership. This means that someone who associates with a partnership can unintentionally become liable for actions against the partnership.

The partnership’s terms, including guidelines on profit sharing, handling of partnership property, and decision-making, can be governed by a written agreement. Otherwise, these terms can be controlled by statute.

Limited Liability Partnerships

A limited liability partnership (LLP) is fundamentally similar in structure to a general partnership. However, it must be formed by filing company articles with the Secretary of State. An LLP will be required to carry a specified amount of liability insurance, and, in exchange, its partners will gain a certain level of protection from offenses the LLP might commit.

Limited Partnerships

A limited partnership (LP) also requires company articles be filed with the Secretary of State and carries more structure than an LLP. While a general partner assumes unlimited liability through direct management of the company’s affairs, limited partners take on a more passive role and are generally only liable for their contributions to the LP. This can be challenged, however, if a limited partner begins to act more like a general partner. A limited partnership interest is frequently considered a security.

Corporations

Corporations are among the most complex business entities, with numerous possible subcategories, but they also carry many organizational benefits. To create a corporation, you must file articles of incorporation, hold an organizational meeting, and establish bylaws for the company.

Though there are many subtypes of corporations, they all generally include these three categories of participants:

• Officers who handle the company’s day-to-day affairs
• Board of directors who oversee company management
• Shareholders who serve as passive equity investors

Being a shareholder, or owning a “share,” typically gives you voting power and other rights, including access to company financial documentation. You will also not be personally liable for corporate actions in most circumstances.

An S corporation is often called a “flow-through” entity because its income, losses, deductions, and credit pass through to shareholders. Conversely, a C corporation experiences two layers of taxation, as the entity itself is taxed separately from its owners. In the state of South Carolina, you can also form nonprofit corporations, statutory close corporations, and professional corporations. Selecting the right category of corporation can be critical in forming a business. Our business lawyer in Summerville can walk you through the pros and cons of each type and give recommendations based on your company’s needs.