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What You Need to Know About Business Entity Formation When just starting out, many small businesses are more like part time occupations. At first, most of these ventures are not profitable. Over time, however, a small business may grow and become a profit generating business that an entrepreneur may concentrate on exclusively. At some point, however, a small business owner has to start thinking about protecting the investment they have made in their business. If you want to protect your business assets, the easiest way to do so is through the process of business entity formation. Business owners who are the sole proprietors of their business are vulnerable to liability to an unlimited degree. For many of you, the term ‘unlimited liability’ probably requires some further explanation. This terms suggests that sole proprietors whose businesses fail stand to lose quite a bit more than just their business assets. This can include personal property, like your home or other valuable property in some states. This is the main reason why business entity formation is such an important thing for business owner to learn about. Once you have come to the decision to form a business entity, you will then need to figure out what kind of business entity that you would like to form. There are several types of business entities that are designed to protect the assets of proprietors in a variety of situations. These business entities include incorporation, limited partnerships or LPs, limited liability partnerships or LLPs and limited liability companies or LLCs. Through business entity formation, a sole proprietor may reap a number of important advantages.
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Limited liability companies, or LLCs, are the most common type of business entities formed today. LLCs are the perfect solution for a small business because they are structured like partnerships, while offering protections that are close to those of a corporation. The process of getting an LLC consists primarily of applying for it through your state comptroller’s office. After being granted with your LLC, you will be given a tax ID number from your state comptroller.
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Any small business owner who is interested in learning more about the asset protections that are available from business entity formation should begin by speaking to a business attorney about the process of forming a business entity. By discussing your situation with a business attorney, you will be able to find out everything you need about business entities to protect your assets in the most effective manner possible. The laws governing business liability are different from one state to another, making it important to ensure that you get in touch with a business law attorney in your state to ensure that the advice you get about forming a business entity is as accurate as possible. All you need to do to get started is perform a search using your preferred search engine for business entity formation or a business attorney working in your area.