Starting a New Business in Illinois
When a client wants to start a new business in Illinois or purchase an existing one, one of the initial considerations is whether or not to incorporate or what unincorporated business entity will best benefit his or her business’ needs. Choosing a business organization as an unincorporated business (for example, as a sole proprietorship, general partnership, limited liability partnership, or limited liability company, etc.) or as a corporation depends on tax and non-tax factors. For instance, certain businesses cannot be incorporated, while other businesses, like medical practices, banking and insurance institutions, must be incorporated. However, clients involved in a wide range of business activities, have the choice of the form of business organization.
Choosing the Best Type of Business Organization
Business organization considerations involve how the business entity is taxed, the amount of individual liability, and the amount of control an individual has over the business. Generally speaking, over the past decade the limited liability company (LLC) has been the business organization of choice for most new business owners. However, there are other forms of business organizations that may be preferable and/or appropriate. For instance, in a sole proprietorship business entity, there is only one business owner. In this sense, the individual has full authority and control over the business but also assumes unlimited liability for all debts incurred by the business, and the business is taxed as an individual.
On the other hand, a general partnership may best benefit a business entity with more than one owner if the business doesn’t have significant exposure to liability. The general partnership is very similar to a sole proprietorship with two exceptions: there is more than one business owner, each partner of a general partnership has unlimited liability for the business’ debts, and each partner has the implied authority to bind the firm to third parties within the scope of the usual and ordinary activities of the particular business. Many business owners decide to organize a limited liability companies because the partners (or in the case of a limited liability company, it’s members) have limited liability as to debts and responsibilities, they may all have full management power (or there may be one or multiple managing members), and there are various tax benefits to this type of business organization – an LLC may be taxed as a sole proprietorship, partnership, S-Corp and C-Corp.
Call Our Chicago Business Attorneys
Our Chicago business attorneys have decades of combined experience with handling many different business organization and matters throughout Illinois. To schedule a consultation with one of our Chicago business lawyers today, please contact us online by completing the form to your right or give us a call at 312-789-5676.