How to Choose a Business Structure for Your Law Business

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Starting your own law
business can be incredibly exciting and offers more than just financial rewards.
It provides an opportunity to build something for yourself that can provide for
you and your family and serve the community.

When you first begin
any business, there will be many things for you to consider. You may have staff
to hire, premises to find, as well as equipment to source and advertising
strategies to implement. You must also take some time to think about your
business’s structure, and how your company will function when reporting income
for taxes.

Different business
structures offer different benefits, and the choice you make could be the
difference between long-term success or failure. Here are a few of the
questions you will need to ask yourself when you are deciding which type of
company you want your law business to be.

Are You a Sole Proprietor or in a
Partnership?

When you are choosing
which business structure to operate, one of the biggest deciding factors will
be whether you are a sole proprietor or whether you are in a business
partnership with another party or investors.

Being the sole
proprietor has its advantages, but you are wholly responsible for all your business’s tax
obligations
and legal
liabilities. In a partnership with one or more people, these obligations and
responsibilities can be spread across all the owners of the business. If you
have partners or investors, they should be a part of the process to decide
which business structure your company should use.

What Are Your Tax and Legal
Liabilities?

Sometimes business
entrepreneurs make the mistake of overlooking the tax and legal liabilities
their business will have as they operate, and what impact the different
business structures could have on those liabilities.

Limited Liability
Companies are popular with many business owners. You can read lots about what an LLC is by
researching on the web,

but their main advantage is they protect business owners from financial and
legal penalties by making the company itself a legal entity. This distances
business owners from responsibility for debts incurred by the company,
insulating their personal wealth from the business’s finances.

What Are Your Future Plans?

You may have grand
plans for the growth of your law business, and these should be considered when
choosing your business structure so your business has the room it needs to
grow.

A structure known as an ‘S’ Corporation is well
suited to law businesses

as it limits the amount of self-employment tax that working partners must pay,
and does not require multiple levels of stock or more than 100 shareholders in
order to operate, allowing a law business to be easily divided among a few
partners or owned solely by one person.

When operating any
business, but perhaps especially a law business, it is important to make sure
you are adequately protected from financial and legal liabilities.

Having the right
business structure can also save you and your business a lot of money by
reducing your company’s tax burden and preventing you from paying excessive
taxes on your personal income.

The post How to Choose a Business Structure for Your Law Business appeared first on Bitter Empire.