Entrepreneurs starting almost any kind of company in Colorado frequently need to establish their businesses as legal entities separate from themselves. This designation allows business owners to buffer their personal financial lives from business liabilities like debts or lawsuits. Entrepreneurs often choose the business structure known as a limited liability company because of its flexibility and straightforward tax filings.
With an LLC, people’s business income passes from the company to their personal tax returns. They do not need to file a complex corporate tax return, and business profits are only taxed once as personal income. These characteristics of an LLC reduce accounting and tax filing burdens on businesses.
Although an LLC grants people most of the liability protections associated with corporations, this business structure does not suit every entrepreneur. People forming enterprises who plan to entice investors by issuing stock should opt for a corporation because an LLC cannot accommodate that goal. Businesses that are likely to expand across state lines might also want to become a corporation because LLC rules vary by state.
A person who is forming a new enterprise could gain recommendations about selecting the right structure by consulting a business law attorney. A lawyer could explain the pros and cons of different types of business structures in relation to the person’s goals. Research to confirm that the business has a unique name that is not registered to another party could be conducted by an attorney. This service could prevent inconvenient and possibly damaging disputes. Going forward, legal guidance might aid an individual with the drafting of agreements that specify ownership and responsibilities. A lawyer could also inform a person about the regulatory and licensing requirements applicable to his or her business and help him or her obtain any necessary authorizations.