Legal information for new small businesses

Legal information for new small businesses

| Jul 2, 2020 | Small Business |

Residents of Georgia may be interested in forming a small business and want to know more about the process. There is information from the government regarding what is needed and what it means to form an LLC or Limited Liability Company.

Each state has different regulations as to starting a Limited Liability Company. With no maximum number of members, individuals, corporations, other LLCs and foreign entities can form an LLC. Single-member companies may also be allowed in some states.

The IRS treats the LLC as either a corporation, partnership, or as part of the LLC’s owner’s tax return (a “disregarded entity”). With two members, this type of company is classified as a partnership. Those who are starting a business, no matter how many members, will want to know more about the LLC.

Considered a separate entity, an LLC with just one member is treated as an entity disregarded as separate from its owner. For employment tax and certain excise taxes, an LLC with only one member is still considered a separate entity. For those needing to defer personal liability, an LLC is the answer.

Business formation is made easier with a knowledge of business law. Legal issues often come up when a small business is started. Even with just a single member, it is essential to draft an operating agreement that defines the operations at a macro level.

Checks, meetings, voting, party interaction, removal of members and more are all part of business formation that needs the help of an experienced attorney. Otherwise, members may be exposed to significant liability; the long-term well-being of a business may be compromised if the proper documentation is not addressed. A knowledgeable attorney will also know if forming an LLC is not in the best interests of the company.