At Topkins & Bevans we have the knowledge and experience to assist you with all of your business needs. If you are looking to start a business, we will work with you to ensure that the appropriate business entity is created for your particular business needs. We will also work with your accountant and other business advisor(s) to implement favorable business tax results for your business. If you have an existing business, we have the experience and expertise to assist you with, in part: the drafting and legal evaluation of your business contracts; the leasing or purchase of real estate or goods for your business; representing your business in any litigation matter; and handling the sale or closing of your business.
You should know that there are five basic types of business entities available to you in Massachusetts: Sole Proprietorship; Partnership; Corporation; and Limited Liability Company and Limited Liability Partnership. Each of these business entities has advantages and disadvantages, as generally reviewed below:
Sole Proprietorship: If you operate a sole proprietorship, then you are the only person legally responsible for your business. As a general rule, in operating a sole proprietorship you are not required to observe many of the formalities that you would be required by law to follow as to the other business entities. As a sole proprietor, you are personally liable for all of the debts of your business.
Partnerships: If you operate as a partnership, you have two choices, a General Partnership or a Limited Partnership. These entities are similar and the distinctions between the two involve levels of liability and certain formalities that must be observed. For both entities you would be required to have a partnership agreement for you and your other partner(s). The partnership agreement is an extremely important document that will set forth the rights, obligations, and duties between you and your partner(s). In either form of partnership, if you are a general partner then you would be jointly and severally liable for all partnership debts. If you are a limited partner, then you are only liable to the extent of your capital contribution to the partnership.
Corporation: In order for you to incorporate a business, you must file certain documents with the Massachusetts Secretary of State’s Office. Once created, by law there are certain formalities that you must be follow in the operation of your corporation. A corporation has shareholders, who have an ownership interest in the corporation, and officers, who run the corporation, under the direction of the corporation’s directors. It is legally permissible for you to create your corporation without any involving any other people. In that case you would be the shareholder, director and holder of all offices for your corporation. If you create a corporation, then subject to certain exceptions, as a general rule you and any other corporate shareholders and the officers are shielded from personal liability.
Limited Liability Company: Like a corporation and a limited partnership, the creation of a Limited Liability Company (“LLC”) requires you to file certain documents with the Massachusetts Secretary of State’s Office. Based on your particular business needs, a LLC may provide you with more freedom in the operation of your business when compared to the requirements that apply to you as to the operation of a corporation. In an LLC you would be a called a “Manager” and operate the business affairs of the LLC. You may have other “Members” in the LLC who, generally, have the same rights as shareholders in a corporation. It is legally permissible for you to have an LLC that is operated solely by you. If you opt for an LLC then, subject to certain exceptions, as the LLC Manager you are shielded from personal liability. Members of your LLC would have no personal liability as long as they do not participate in LLC activities.
Limited Liability Partnership: This entity is similar in structure to a general partnership. Your liability and the liability of each partner are limited to his or her percentage interest in the LLP.
In closing, the formation of your business entity presents a great opportunity for you to establish a trusted relationship with an experienced law firm. If you already have an established business, then you know how valuable it is to have the highest level of legal representation for your business needs. Whether you are just starting out or already have an established business, look to Topkins & Bevans for all of your business needs.