VanAntwerp Attorneys, LLP
Phone: 606-618-0698

Getting your business off on the wrong foot

Choosing the right structure for your business at the very beginning may be the most important decision you will make.

At VanAntwerp Attorneys, we assist business start-ups in making the choice that leads to success, not frustration.

Think through these entity choices and ask yourself: Which of these makes the most sense for my business?

Sole proprietors

Companies that start small almost always elect to be sole proprietorships. The reason is, they are easy and cheap, requiring no special paperwork or tax documentation.

But simplicity comes at a price. When you are the sole proprietor, your finances and your business's finances are one and the same. This means you are personally liable for any debts or disasters that befall you. A single auto accident might end your business dream.


Sole proprietorships often blossom into partnerships, when another team member joins - two guys and a van, as opposed to one guy in a van. Partnerships are also very simple to set up.

Partnerships offer the same challenge as sole proprietorship - you and your partners are on the line for debts, legal actions and bad luck. Also, partners don't always agree on everything. What will you do if your partner spends all the money?

This is not to knock partnerships, just to acknowledge that for some people, it's not the way to go.

What choices are there for a business seeking to limit liability?

Limited liability companies (LLCs)

Limited liability companies build a wall between your personal finances and your business finances. They can be set up as a successor to a one-person sole proprietorship, or they can be established with more than one participant.

But LLCs require more attention than the simpler entities. For one thing, you have to decide what type of LLC to create. An LLC can be set up as "term" or "at will." It can be either "member managed" or "manager managed." These differences affect business succession and sale and define what each individual's responsibilities are.

Now you understand why it's wise to work with an attorney on this choice - because one wrong decision will cost you.


You don't have to be big to incorporate, and there are distinct advantages to incorporation. You can sell stock, so you have the power to grow. You can elect to be a C-Corp or S-Corp, depending on which taxation model works best for you.

But corporations are more complicated. You need to name officers and directors, hold regular board meetings, and you are responsible in many ways to your investors. You may even be responsible for debts owed and actions taken by the corporation.

There is great power in incorporation, but it requires constant attention.

After reviewing these possibilities, you may be thinking, "What should I do then?" In truth, it is rare for the entity you choose to be perfect in every way. But one of these options is best for the business idea you hope to set in motion.

The best advice

Always work with an experienced business formation attorney like VanAntwerp Attorneys before you decide. We have helped so many startups succeed because they got off to a good start. We can help you, too.

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