Business Structure and Incorporations Or Entity Planning
Entity Structure and Planning Lawyer Serving Yorkville, Plano, Oswego, Plainfield, Shorewood, & Joliet
Choosing how to legally structure your business is a very important decision. There are several different types of business entities in Illinois. The form you choose for your business will determine taxes, liability issues, and ownership. In order to make the proper choice, it is important to seek the guidance of an experienced business law attorney. At the Robertson Legal Group, LLC, we are skilled in advising businesses on entity selection during formation, mergers, and acquisitions. We will explain the differences between each entity and which will work in your business’ best interests.
Types of Business Entities in Illinois
In order to make the right decision about how to structure your business, you must have an understanding of the advantages and disadvantages of each choice. The business entities available in Illinois include:
- Sole proprietorship (SP) – These are individually owned and operated businesses. They are quick and easy to establish as no paperwork is required to be filed. There is no legal separation between the business and the owner, and financial profits and losses are included on the owner’s personal tax return. Additionally, the owner is held personally liable for all debts and lawsuits.
- General Partnership (GP) – Similar to the SP except with two people instead of one. A partnership agreement is not required but recommended to specify the rights and responsibilities of both parties. This entity has the same tax and liability disadvantages as an SP.
- Limited Partnership (LP) – Similar to a GP, but there are two levels of partnership—general and limited. Typically, limited partners are only personally responsible for business liability up to their investment and do not have managerial authority. General partners maintain managerial authority including legal liability.
- Limited Liability Company (LLC) – LLCs are separate legal entities from the owners. The owners are only liable up to their personal investment. Articles of Organization must be filed with the Illinois Secretary of State in order to establish an LLC. LLCs can be managed by the owners (called members) or by a manager hired by the owners.
- Corporations – C Corporations and S Corporations fully separate a business from its owners and shareholders so long as the rules of operation are followed. Forming a corporation can be a complex process in which Articles of Incorporation must be filed with the Illinois Secretary of State. Additionally, there are a number of rules and formalities corporations must follow. With C Corporations, both corporate income and shareholder income is taxed, which amounts to double taxation. With S Corporations, shareholders may report corporate income on their personal income taxes only according to their percentage stake in the company.
For experienced guidance in entity planning for your business, contact us at 630-780-1034 to schedule a consultation. We will go over the specifics of your business and discuss your structuring options. Attorney Sean will work with you to make the best decision for your business and help you complete the necessary paperwork to establish your business entity. We work with entrepreneurs, professionals, and businesses throughout Kendall County, Will County, and Grundy County.