Formation for Small Businesses

After spending a significant amount of your professional life working in a corporate environment, you suddenly find yourself downsized or made redundant.  The company paid you a severance package, but you are far too young or energetic (or your retirement savings are insufficient) to retire.  Now you have a choice – do you go back to the corporate grind, or strike out on your own?

Do you have a great idea that you think can make you rich, or a skill you want to try marketing on your own as an independent consultant?  Or do you simply want to experience life as your own boss in a small business?

Thousands of individuals answer one or more of these questions in the affirmative each year and decide to go into business for themselves.

As they start, business owners sometimes fail to insulate themselves from personal liability with a legal corporate structure.  A limited liability company (LLC) is the most common structure used by small business owners and independent consultants (except physicians, who generally use a professional corporation (PC).

The advantage of an LLC (or PC) is that it is a legal entity that can enter contracts and insulate the members (owners) from personal liability for company debts and obligations.  LLC’s do not pay taxes, rather, the members of LLC are taxed based on the amount of profits they take as distributions (in lieu of salary).

At ZH, we can help small companies and individuals to form an LLC or PC, including state and federal registration and preparation of an Operating Agreement.