Choosing how to organize your business requires careful thought and preparation. Beyond picking a jurisdiction in which to register your business, the legal structure of your business will affect your liability risks and your taxes. Ultimately, choosing the right business structure depends on the individual considerations for each business.
The attorneys at Hessian & McKasy, P.A. are experienced in business formation and can help you choose the business structure that is right for your needs, whether that may be a corporation, nonprofit organization, partnership, or limited liability company (LLC).
Organizing your business as a corporation can help protect your personal assets in the event your business is sued. Incorporation creates a legal separation between your personal assets and those of your business. Therefore, unless you are intentionally engaging in wrongful conduct, such as using your business's funds for personal purposes or failing to observe proper business procedures, your personal assets will generally be protected in the event of a judgment against your business.
Persons working for a business are classified as either employees or independent contractors. This designation has substantial importance under state and federal law, as there are many benefits and protections that are afforded to employees that may not apply to independent contractors.
The test for determining whether someone is an independent contractor can vary between jurisdictions. In general, however, whether a worker is an independent contractor or an employee depends on the amount of control that the employer has over the worker. If the employer only has control over the final product of the work, the worker will likely be considered an independent contractor. Conversely, if the employer has control over the manner of the worker's performance, such as by providing certain equipment to be used or setting the hours in which the work must be performed, the worker is likely an employee.
It is smart for even small business to prepare an employee handbook. A well-drafted handbook will establish the rules, rights, and expectations for your employees. Having these policies laid out in advance will clarify expectations and mitigate future litigation.
However, employee handbooks must be carefully worded with your jurisdiction's employment laws in mind. Some states have construed employee handbooks as binding contracts in certain circumstances, even when the employer did not intend to enter a contractual relationship. To avoid potential legal claims, the employer should review their employee handbook with an attorney to ensure compliance with local law.
If you own your own business and are approaching retirement, you should consider establishing a business succession plan. Establishing a solid succession plan can ensure that when you do retire, your business will smoothly transition to a new owner in accordance with your intentions. The attorneys at Hessian & McKasy, P.A. can also help you integrate a business succession plan into your estate planning, in case anything should happen before you are able to transfer your business on your own terms.