Business Entity Formation Basics

Business Entity Formation Basics

What type of legal entity should I form for my business?

The answer to that question depends on, among other factors, the type, the size, the management, and the intended purpose of the business, and the country or jurisdiction in which you intend to do business. Ally Law member firm Birch Horton discusses the questions that should be answered prior to picking an entity type for a business operation and describes three of the most popular entities utilized in the United States. Among the most important considerations for choosing an entity type are the following:

  • Management: Will this business be run by a single manager? Will there be a board of directors? Will it need to have officers? Will it be run by its sole member or members? Will decisions be made by a majority vote of the owners? Will certain decisions require unanimous consent?
  • Size: Will this company be a closely held company? Will there be just one or two owners? Does the structure need to accommodate several owners?
  • Tax Considerations: There are important tax reasons and implications for choosing an entity structure for a particular type of business. A consultation and analysis by an accountant is an important step in the business formation process.
  • Future Growth and Changes: Are there plans for growth and expansion or is the company’s purpose limited and distinct?
  • •Capitalization: How will the company be capitalized? Is there a need for investors now or potentially in the future? Will the company need to obtain financing?


Allys Law Business Entity

Common U.S. entity types include the Limited Liability Company (LLC), the C-Corporation, and the S-Corporation. The differences between these three common types of business entities involve varying treatment for taxation, capitalization, liability, and owner requirements. When thinking about how to structure your business entity, consult your Ally Law member firm’s corporate attorneys. They will help you consider all aspects of the business and your goals to determine the best structure to meet your needs. For more information about our services in this area, contact us at

Click here to read the complete article by Kristy Garrett of Ally Law member Birch, Horton, Bittner & Cherot, PC



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