Branching out and starting your own business is an exciting proposition. It can also come with complexities and concerns around making sure you have the right business structure, including meeting all applicable compliance and regulatory needs for your business type. John Frank Higgins has helped numerous business owners make this step across Tennessee and is eager to help you get to this exciting stage in your life.
Setting Up A Business In Tennessee
There are many things to consider to ensure you have the proper legal structure for your business. John’s expertise will help you ensure you are selecting the right structure to secure both liability concerns and ensure you maximize the tax benefits for the various structures. The following illustrates the most common structures and how they might relate to you:
Sole Proprietorship: Certainly the most basic and easy-to-set-up structure available. The sole proprietorship is linked to you as an individual and all liability is generally focused on you personally. This type of structure is often used with individuals starting out with a small business, consultancy, service or trade oriented business, and the like. Most often a person utilizing this structure will not have employees and more often then not will upgrade their structure to a Limited Liability Company or an S-Corp in time as they grow, add staff, and have a need for broader tax benefits.
General Partnership: Much like the sole proprietorship, a general partnership is ideal when two or more individuals seek to start out on their own and create a new business. Much in the way that a sole proprietorship is a stepping stone to a more complex structure, there are also the similar liability concerns associated with being directly tied personally to the business and it’s activities.
Limited Liability Partnership: The Limited Liability Partnership is a common choice for professional firms such as accountants, lawyers, medical practitioners, and other similar business sectors. The structure provides a liability shield and provides a level of isolation for the partners from the business and it’s activities. Some activities can result in the liability shield being pierced, however this is generally difficult so your personal assets are somewhat protected in the event your business is sued. From a tax perspective, the Limited Liability Partnership serves as a pass through entity to the partners and can easily support employees within this structure.
Limited Liability Company (LLC): The Limited Liability Company or often simply referred to as an LLC for its initials, is one of the most common structures for a business. It provides for an ability to have multiple shareholders and is a nice pass through entity when a corporation (either S or C type) wishes to have several subsidiaries that operate and function independently of the parent company. The LLC also provides a liability shield much in the same way the Limited Liability Partnership described above provides. This business type can be registered as a foreign or domestic LLC allowing you to take advantage of tax and regulatory advantages from other jurisdictions (say those offered by forming an LLC in Delaware vs. Tennessee).
S-Corporation: The S-Corporation is a simpler variation of its cousin the C-Corporation, which most large companies both private and publicly traded utilize. The S-Corporation provides limited liability for it’s shareholders and also allows for numerous tax benefits such as the ability to classify some of the pass through earners (or shareholder returns) as capital gains versus regular income. If you anticipate large levels of returns, or simply wish to hold several different business enterprises under one roof, this might be the right choice for you.
C-Corporation: The C-Corporation is the most common entity for large-scale operations, particularly where stock in the company is routinely leveraged and sold for capital investments and to drive growth. The structure easily allows for multiple shareholders and can facilitate a move to take a company public, should that direction be deemed beneficial over time. Similar to the liability shields mentioned above, this structure also provides a shield for it’s owners and shareholders preventing loss of personal assets in the event of a lawsuit against the company. Most companies will evolve to this structure eventually and it is uniquely suited for more complex business structures and holdings.
John Frank Higgins can help you to determine which structure is best suited for your needs, along with drawing up the required paperwork and business filing needs to get you up and running. We’re eager to help you launch your new business endeavor so please feel free to email us at firstname.lastname@example.org.
Employment Law Requirements in Tennessee
Another important aspect of starting your own business is the process of adding employees as you grow. There are numerous laws and regulations relating to how you hire on-board, maintain, and in some cases dismiss employees. John Frank Higgins can help you navigate this complex web of laws to ensure that your liabilities are minimized at every step of the way.
With the adoption of the Affordable Care Act, or Obamacare, there are new requirements that businesses must meet when hiring employees to ensure that the workforce has adequate and affordable healthcare coverage.
As your business grows, turn to John Frank Higgins for legal support; we’re here for you.