Washington, DC Law Firm Helps You Form a New Business
Selecting the proper type of business entity is important
When you decide to start your own business, one of the first decisions you must make is whether your operation should be a corporation, partnership, sole proprietorship, or some other type of business entity. The business law attorneys at Douglas & Boykin PLLC guide you through the options and help you make the right choice.
What types of business entities does Washington, DC recognize?
The business form you should choose depends on your answers to several questions, such as:
- How many owners will there be?
- How important is it to limit personal liability for debts and claims against the business?
- Which business structure will result in the lowest taxes?
The types of business entities that are recognized in Washington, DC are:
- Sole proprietorship — A sole proprietorship is a business organization in which one individual is personally liable for all the debts and obligations of the business, is entitled to all profits, and exercises complete managerial control. The advantage of a sole proprietorship is that it is simple and does not require any formal action to establish.
- Partnership — A partnership consists of two or more people or entities that agree to contribute money, labor, property, or skill to a business and share in its profits, losses, and management. You can have a general partnership or a limited partnership.
- A general partnership is made up of investors who manage the business and have unlimited personal liability for its debts.
- A limited partnership allows investors who will not be actively involved in the company’s operations to become partners without being exposed to unlimited liability for the business’ debts. A limited partnership must have at least one general partner and one limited partner.
- LLP and LP— Limited liability partnerships (LLP) and limited partnerships (LP) must register with the Corporations Division of the District of Columbia Department of Consumer and Regulatory Affairs. Before registering, you should have a business law attorney draft an agreement outlining the partners’ roles, responsibilities, and rights.
- LLC — A limited liability company (LLC) is a hybrid of a partnership and a corporation. LLCs are taxed like partnerships but, like corporations, offer the benefit of limited liability. LLC owners are shielded from personal liability, and all profits and losses pass directly to the owners without taxation of the entity itself. LLCs must register with the Corporations Division.
- Corporation — A corporation is a legal entity that has rights and duties independent of the rights and duties of the people who own it. A corporation is legally authorized to act in its own name through its officers and directors. It is liable for debts and can make contracts and pay taxes. A corporation issues stock to its owners, who are entitled to any dividends the corporation pays and to the assets if the corporation is liquidated. Generally, stockholders are not personally liable for claims against the corporation. Corporations must register with the Corporations Division.
The business formation lawyers at Douglas & Boykin are prepared to review your individual goals and circumstances and help you select the most appropriate business entity.
Schedule a consultation to discuss the formation of your business
At Douglas & Boykin PLLC, the attorneys know you have a lot of questions when you are forming your business. Let Douglas & Boykin provide the answers. Contact the firm at 202-753-0042 or online. Douglas & Boykin serves the entire Washington metropolitan area, which includes Maryland and Northern Virginia.