Business Formation

Businesses are born from an idea for a product or service that is felt to be lacking in the marketplace. Decisions regarding the choice of entity, organization, management, and tax filings are critical to the success of the business in delivering that product or service to the marketplace.

Among the many different types of business entities that owners can choose from are:

A sole proprietorship is not a separate legal entity, but refers to an individual who operates a business and is personally responsible for its debts. It provides no liability shield, and everything is reflected on the individual owner’s tax return.
A general partnership is an association of two or more persons who carry on, as co-owners, a business for profit. In a general partnership, each partner shares in the profits and losses of the business and has an equal right to manage the business. A general partnership is not a separate taxable entity from its owners, and provides no liability shield.
A limited partnership is an entity that has one or more general partners and one or more limited partners. The general partner(s) exercise control over the business and are personally liable for the debts and obligations of the partnership. The limited partner(s) contribute money or other assets in return for an interest in the partnership, but have minimal control over the operations of the partnership and have no personal liability for its obligations beyond their investment.
A limited liability partnership may be in the form of a general partnership or limited partnership, but in addition, limits the personal liability of all the partners.
A corporation is an entity organized under state law and offers limited liability protections to its owners. Stock corporations issue shares to persons who become shareholders, but the corporation is managed by a board of directors and officers. Corporations can be taxed under either Subchapter C or Subchapter S of the Internal Revenue Code.
A professional corporation is a stock or nonstock corporation organized for the sole purpose of rendering professional services by licensed professionals.
A nonprofit corporation is organized under state law to meet specific tax-exempt purposes.
A limited liability company is organized under state law and offers liability protection to its owners, allowing them to fully participate in the management of the business without subjecting themselves to personal exposure for the liabilities of the business. LLCs are typically managed in accordance with an operating agreement, and can be taxed as a partnership or a corporation.

Each type of business entity has its own unique risks and rewards and has different structures for how it is organized and managed.

The attorneys at PLDR are equipped to help prospective business owners wade through the myriad considerations in order to reach conclusions best suited to the particular needs of the business. We can help the single owner determine the need for and choice of entity and we can help multiple owners determine the best way to share ownership and management and plan for future changes.

Office Hours

Mon - Fri 8:30 am - 5 pm
Sat Closed
Sun Closed

Contact Us

725 Church St. #1200 
Lynchburg, VA 24502 

434-846-2768
434-846-8195
This email address is being protected from spambots. You need JavaScript enabled to view it.