Starting a business, as some of our readers know, requires careful planning and completing the necessary legwork. And while it may be relatively easy to actually establish a business entity, it is so important to get it right the first time, particularly with regard to business structure. The way the business is structured affects numerous aspects of its operation, including taxes, how disputes are handled among shareholders and owners’ liability for business liabilities.
The types of entities one can form for a business are fairly straightforward: corporation, nonprofit, limited liability company, partnership, and sole proprietorship. Still, there can be a lot to making a selection to meet the business’ needs. Taking partnerships, for example, there are various forms they can take: general partnerships, limited partnerships, limited liability partnerships and limited liability limited partnerships. Understanding the nuances involved in these various business forms is important so that one selects the correct structure for a business’ operations.
Selecting an entity type and drawing up governing contracts and documents is not the only task in forming a business. One must also register the business with the Secretary of State, obtain an Employer Identification Number from the IRS, open a business bank account, and obtain any necessary licenses and permits. In addition, one must also provide the necessary notifications to the Ohio Department of Taxation, the Ohio New Hire Reporting Center, the Ohio Bureau of Workers’ Compensation and the Ohio Department of Job and Family Services. All of this, which is outlined on the Ohio Secretary of State’s website, takes time and sometimes a good deal of patience.
Once a business is up and running, there are ongoing tasks that need to be completed, including taxes and annual reporting. All of this can add up to quite a lot of work.
It is critical for those starting a business to consult with an experienced attorney to obtain the guidance necessary to make wise decisions at the beginning. Failure to do so can result in more work down the road if, for instance, the company has to change its structure. Such cleanup work can take months or even years, so it is best to get things right the first time around.
Source: Ohio Secretary of State, “Starting a Business,” Accessed April 24, 2014.
