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Entity Formation

Choosing the right business structure is the first step to running a successful business. Entity formation is the process of creating a legally recognized business entity. Entrepreneurs have many different entity choices available, each with its own requirements and legal obligations. Popular entity choices include partnerships, corporations, and limited liability companies.

Business Entity Formation

Choosing the correct entity is a key step in any business venture (often one of the first). The correct entity formation can help you maximize profitability, create tax advantages, and set your business up for sustainable growth.

Many small businesses can begin with a limited liability company (LLC) to structure their business and protect their personal assets. We can assist business owners with all their LLC needs, including their articles of organization, operating agreement, and an employer identification number (EIN) at a fair cost. If an LLC is unsuitable for a particular business, we can discuss the different types of corporations and partnerships. We review the advantages and disadvantages of each business type with our clients so the business owner can make the right choice for their business.

Our Services Include:

Counsel on Entity Selection

Book a consultation to discuss your vision and mission so we can help you choose the proper structure for your business. We spell out the pros and cons of each business type and how it can fit into your vision.

Document Preparation and Filing

We know and understand Ohio business laws. We're able to prepare and file your paperwork and legal documents.

Compliance Assistance

Non-compliance with regulations can prove costly. Our team will help you to understand and comply with applicable federal and state laws.

Ongoing Legal Support

After establishing your business, our team can remain available through an outside general counsel arrangement to address any rising and ongoing legal concerns.

Types of Business Entities

Sole Proprietorship

Individuals who run a business independently without an entity are called sole proprietors. Examples of sole proprietorships are readily available. Consider many freelance writers, graphic designers, and photographers. It is the oldest type of business entity but has no legal personality. As the owner, you will bear all the legal risks while you enjoy the profits.

The simplicity of sole proprietorship makes it ideal for small and medium-sized businesses. It is especially appealing that no separate legal process is required to form a sole proprietorship. S1329.01(B) of the Ohio Revised Code allows sole proprietors to register their business trade name under any available name. While this won’t provide legal separation, it can give your business its own identity and ensure others won’t take your desired trade name.

Partnership

In a Partnership, two or more persons called partners run the business. Legal partnerships come in several forms, each with distinct characteristics and implications for liability, management, and taxation. Due to their shared interests, partners have a joint responsibility towards the company. Partners do not always have equal interests. Ownership interest depends on the type of Partnership entered into.

In a General Partnership (GP), all partners contribute equally to, are liable for, and control the business. At-will general partnerships can be terminated at any time if a partner gives notice of their intent to dissolve the partnership. Otherwise, partnerships may be dissolved in accordance with the partnership agreement. In a Limited Partnership (LP), general partners run the business and assume full liability while limited partners contribute capital but have limited liability and no role in management. Limited Liability Partnerships (LLP) offer partners protection from personal liability for the business's debts or the negligence of other partners, making them a popular choice for professional services firms like law or accounting practices.

Limited Liability Company (LLC)

There are options to separate your business’s risks and profits from yourself. Once you create a separate legal entity for your business, it becomes a legal person.

Owning an LLC means your company has a structure with a board of directors and shareholders you are answerable to as members. LLCs are subject to taxation because your business is treated as a separate legal and taxable entity.

Corporation (C-Corp and S-Corp)

There are two types of Corporations based on taxation. Businesses taxed under Subchapter C of the Internal Revenue Code are C-Corps, while those taxed under Subchapter S are S-Corps.

C-Corps file their tax returns in Form 1120 at the corporate level, while S-Corps file a single federal return under Form 1120S. Shareholders in C-Corps risk double taxation because they are liable to pay tax on their dividends, unlike S-Corp business owners whose taxes are passed through to the corporation.

The Entity Formation Process

Are you ready to set up your new business with us? You can complete the entity formation process in four easy steps.

Initial Consultation

The first step is to schedule an initial consultation with us. We will listen to your plans, and then propose a path forward to establish your business.

Document Preparation

Once you sign an engagement letter to retain our services, we will prepare all the necessary formation documents under Ohio law.

Filing

After we review the formation documents with you and receive your sign-off, we will file the necessary documents with the appropriate government agencies.

Post-Formation

After your business has officially been recognized by the State of Ohio, we will assist you in obtaining your Employer Identification Number (EIN), guide you through opening your business bank account, discuss taxation requirements, and provide guidance on any necessary licenses and permits.

Contact an Attorney for Entity Formation

Our experienced team can provide the legal guidance and support you need to form a new legal entity for business purposes. Connect with Rhodium Law to schedule a free consultation and speak with an experienced business attorney wills near you. Make your dreams a reality by forming your own business.

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Critical Considerations in Entity Selection

Knowing your options for entity formation, you must carefully analyze each type before choosing one for your business. Some key considerations include:

Liability Protection

How do you want clients and customers to interact with your business? Would you like it to be separate from you, or do you not mind bearing all the risks and liabilities?

Tax Implications

Either risk double taxation by registering a C-Corp LLC or protect yourself from personal corporate tax returns with an S-Corp.

Management Structure

Would you let a board of directors or partner run your business, or are you interested in a hands-on approach? Some business types allow for a one-person operation, while others legally insist on a board of directors.

Also, note that your business type will limit your role as an owner. For example, you may want to make essential business decisions yourself, but the entity you choose might require a board of directors to make crucial decisions.

Funding Options

How do you intend to raise capital for your business? LLCs can raise funds with shareholders and other securities, while small-scale companies rely on personal funding and loans to bootstrap themselves off the ground.

Regulatory Requirements

The regulatory requirements for establishing Limited Partnerships, LLCs, and Joint Ventures are strict. So, if you are running a small or medium-scale business, it is best to choose the option with less legal red tape.

Contact a Cleveland Business Attorney Today

Starting a business is one of the most thrilling journeys you'll embark on. It's a pivotal moment that deserves to be done right. Connect with our seasoned business lawyer today and let us help you lay a solid foundation for a prosperous future.

Request a Consultation

Make A Wise Decision

The formation process can be overwhelming for non-skilled applicants but not for our team. With experience forming all types of entities, Rhodium Law has the technical know-how to onboard your new business without hitches. We understand business law, so we can cover all bases, including those you need to learn about, to ensure your new entity is compliant. At Rhodium Law, we tailor each consultation to suit the client’s needs. We listen to all your input while gently steering you in the right direction. At the end of the day, it is your company. Rhodium Law serves as a guiding light to realizing your vision.

Planning for tomorrow leads to peace of mind today. Trust us to help you strategize, secure, and shine.

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