Legal counsel can help an entrepreneur evaluate business goals in light of the entities available.
Once a decision is made to start or acquire a commercial enterprise in Colorado, the entrepreneur will be faced with the crucially important choice of business entity form within which to operate. Foremost in an entrepreneur's mind in considering entity choices are issues of personal liability, taxation, and control, each of which can be significantly impacted by how the business is structured.
Seeking a lawyer early on in the business development process is a good idea so that the choice-of-entity-form decision is informed and carefully thought out with business goals in mind. Legal counsel can educate you on the pros and cons of each business entity type available in Colorado and then assist you in the legal processes needed to set up your entity of choice, including the drafting and filing of legal documents.
When an individual person hangs out a shingle, so to speak, and goes into business alone and without filing any entity formation documents, a sole proprietorship is formed. The owner has complete control of the business, is personally liable for business debt, and pays business taxes (or reports losses) on his or her own tax returns.
Another common business entity form is the general partnership, which is formed when two or more people go into business together. Usually profits, losses, liabilities and control are shared equally unless a written partnership agreement provides otherwise (although an individual partner may be personally liable for an entire debt). Individual partners handle partnership profits and losses on their individual returns. Any partner can legally bind the business to a contract or obligation.
The limited partnership is a variation in which limited partners contribute financially, are limited in liability only to their levels of investment, and do not participate in management with the general partners.
Many businesses choose the corporation as their preferred entity structure. The corporation is a completely separate legal entity from the owners, and, as such, the corporation is liable for business taxes and other liabilities and debts, shielding the owners from personal risk. Ownership is vested in shareholders. How a corporation is or should be taxed and how it will be managed are decisions with which attorney can provide assistance.
The limited liability company or LLC is a popular modern hybrid legal entity that combines advantageous aspects of the corporation (shielding owners from liability) and partnership (taxation matters). Owners are called members, and management is either by the members or by hired managers.
Several other entities are available under Colorado law, like the limited liability partnership, limited liability limited partnership, limited partnership association, and others.
The lawyers at Wick & Trautwein, LLC, with offices in Fort Collins, Estes Park and Windsor, Colorado, help entrepreneurs in all business formation matters throughout northern Colorado and southern Wyoming.