Small Business Formation and Administration
Many people want to own their own business but feel overwhelmed by having to choose a corporate form and ensure they comply with applicable laws and regulations. In most instances, though, it is smart for small business owners to incorporate their company for liability and tax purposes. If you have questions about forming or operating a small business in Illinois, it is advisable to contact an attorney to discuss your options as soon as possible. The capable LaGrange business lawyers of Wilson & Wilson Estate Planning & Elder Law LLC can assess your needs and goals and help you to determine what options are most appropriate. We frequently help people with small business formation and administration in La Grange and other cities throughout Illinois.Small Business Formation and Administration
Generally, it is smart for small business owners to incorporate, as it can help insulate them from liability and often has tax benefits. There are multiple types of corporations, and which corporate form is most appropriate varies depending on numerous factors. Many small businesses will choose to form limited liability companies, commonly known as LLCs. LLCs are generally suitable for companies in which a small number of people have ownership interests. LLCs allow business owners to avoid liability for the business's debts, and the LLC does not have to pay federal income taxes. The business owners must pay taxes on their shares of the business's profits, however.
The Series LLC is a limited liability company structure that allows multiple "series" or sub-companies to be created within a single entity. This allows for greater flexibility and protection for businesses with multiple projects or income streams, as each individual series can have its own assets, liabilities, and members, while still being overseen by the main LLC.
In Illinois, the Series LLC was officially recognized in 2005 with the Illinois Series LLC Act. Under this act, each individual series is granted the same protection and limited liability as the main LLC, meaning that assets belonging to one series cannot be used to pay for the obligations of another. This provides a level of risk management and asset protection that traditional single-entity LLCs may be unable to match.
To set up a Series LLC in Illinois, business owners must file Articles of Organization with the Secretary of State and include specific language indicating the company will operate as a Series LLC. Additionally, each individual series must be registered with the state, have its unique name, and keep separate records and financial statements.
While the Series LLC can be a powerful tool for businesses with complex structures or multiple income streams, there are some potential drawbacks to consider. One concern is that the legal implications of a series LLC are still not fully understood in all states, meaning that it may not be recognized or provided the same level of protection in some jurisdictions. Additionally, the added complexity of managing multiple series within a single entity may require more administrative work and legal fees than a traditional LLC.
C corporations, most commonly known simply as corporations, provide business owners greater insulation from personal liability than LLCs, but the corporation has to pay federal income taxes, and the profits from the corporation do not pass through to the business owners. S corporations, conversely, provide business owners both protection from liability and allows profits to be passed through to business owners. Business owners that want to form an S corporation must meet strict requirements, though.
If a business is owned by two individuals, they may want to consider forming a partnership. There are multiple types of partnerships that offer varying degrees of insulation from liability. Ultimately, anyone considering forming a small business should speak to an attorney to determine which option is best for them.
After choosing a corporate form or partnership, the business owners must then choose a name and file any appropriate paperwork. If they form a corporation, they will need to file articles of incorporation and draft by-laws. While articles of organization are not required for LLCs, it is prudent to draft them; similarly, people that create partnerships should memorialize the terms of their agreement in writing. They may also need to register their business with state and federal agencies and obtain state and federal operating identification numbers. They must apply for any necessary licenses and permits as well. Finally, they will need to choose an operating location and should open bank accounts for their business.Meet with a La Grange Estate Planning Attorney Today
Owning and operating a small business can be a rewarding experience, but if business owners do not take certain measures to protect their business and assets, they may expose themselves to liability and significant taxation. If you are interested in learning more about business formation and administration, it is prudent to meet with an attorney. The knowledgeable LaGrange attorneys of Wilson & Wilson Estate Planning & Elder Law LLC are proficient at helping people incorporate small businesses, and if you engage our services, we can guide you through the process in an efficient manner. We frequently aid people with business needs in Cook County, including Chicago, Arlington Heights, Cicero, Hoffman Estates, Mount Prospect, Palatine, Schaumburg, Evanston, Skokie, and Tinley Park, DuPage County, including Naperville, Aurora, and Wheaton, and Lake County including Buffalo Grove, Mundelein, Highland Park, and Waukegan. Our primary office is in LaGrange, and we have a secondary office in Northbrook. You can reach us via our form online or at our LaGrange office at 708-482-7090 or our Northbrook Office at 847-656-8958 to set up a meeting.