One of the most important decisions a business owner needs to make is what type of business entity they are going to use. A sole proprietorship can be started virtually instantly and gives maximum flexibility to a small business, but it also means the owner’s personal assets are at risk to cover business losses and liabilities. A corporation generally provides more protection but requires far more legal steps to be taken.
Often, there is a gray area when choosing which form of business makes the most sense. A business owner who personally performs most services or is in a special regulated profession may not be fully shielded from personal lawsuits even if they form a corporation. For some activities, insurance may be available that lessens the risk of forming a sole proprietorship. For these reasons, it’s a good idea to talk to an experience corporate law attorney about what kind of business you will be creating and what your plans are for future growth before you make any decisions.
Maintaining a Corporation
Filing the articles of incorporation is only the beginning for a corporation. Each year, annual reports must be filed, a board of directors must be selected, and shareholder minute meetings must be kept even if the corporation consists of a single shareholder who holds all of the board positions. If these corporate formalities aren’t followed to the letter of the law, a court may later determine the business wasn’t actually acting as a corporation and hold the owner(s) personally responsible for any debts or liabilities. Meeting with an attorney each year can help ensure that all of the paperwork is in order and good records are kept.
To talk to an experienced corporate law attorney in the Tampa-St. Petersburg Area, call the Law Office of John K. Carter today.