However, starting a business as a family can present a whole different set of questions and considerations on top of the general issues and obstacles that can come with small business ownership.
The legal structure for your family business is paramount to both its operational success and protection from legal issues. Selecting the appropriate structure for your family business is important, and it’s in the best interest of the family and the success of the company to consult a business lawyer to set up your structure, finances, taxes, operational elements, etc.
There are many types of businesses, from non-profits to property management to restaurants. A lawyer can help you decide which of the several business structures makes the most sense for you and your family.
The most common company structure options include:
- S Corporation: the most complex of these options; asset protection from numerous legal challenges; provides pass-through corporate tax structure; professional legal assistance for initial filings and ongoing compliance.
- Limited Liability Corporation: provides a limited degree of asset protection; requires additional paperwork and filings, including a list of corporate officers.
- Partnership/Sole Proprietorship: limited paperwork and filings to start; offers the least amount of protection of business and personal assets; also known as “doing business as,” or a dba. Management and other operational issues can become problematic or at least complicated with family members as “partners.”
Once you’ve set up your company’s structure and filed the necessary paperwork for your company to do business, you’ve taken the first major step toward brining to life your family’s entrepreneurial endeavor. You will be set up to receive income, file the appropriate taxes and conduct business.
To take this first step, consult BoneeWeintraub. We focus on all types of businesses that we help grow and prosper including multigenerational, family-owned businesses.