Knoxville Entity Formation Attorney
Starting a new business has never been easier in Tennessee. However, the choice of how you organize your business is critical to its success going forward. Although anyone can create a sole proprietorship using their Social Security Number, most entrepreneurs would benefit from creating a specific business entity.
This is an important decision. Forming the wrong entity or creating it without necessary planning can create huge headaches down the road. For assistance, speak with a Knoxville entity formation attorney at Brezina Law today.
Entities We Can Form
If you create a sole proprietorship, you will have maximum legal exposure when things go wrong. This means you can be personally sued for business debts or wrongful acts, and your personal assets are vulnerable to seizure.
Other business entities are better choices. We can help you choose between:
- Two or more people can form a partnership. They will enjoy equal power to bind each other and the partnership to contracts. However, they face legal exposure for debts and liabilities.
- Limited partnership. Tennessee allows the formation of a limited partnership, which shields partners from personal liability.
- C corporation. This entity is appropriate for large, publicly traded companies. Shareholders who own the company are shielded from liability for the corporation’s liabilities, but profits are taxed twice—at the company level and then at the shareholder level.
- S corporation. This option is appropriate for smaller corporations—those with at most 100 shareholders. An S corp provides limited liability for shareholders, but they also avoid double taxation.
- Limited liability company (LLC). This is a popular business form which shields owners from personal liability for debts and other obligations.
Schedule a meeting and we can walk you through the relevant considerations for your business. We can also help businesses transition to a new entity which might help with raising capital.
Creating Your Entity the Correct Way
Every entity needs foundational documents which explain how the business is run. Without this type of document, many arguments break out between co-owners, which can ultimately derail an organization.
For example, a partnership needs a partnership agreement which clearly delineates each partner’s role. Many partnerships appoint one partner to be the managing partner who makes day-to-day decisions.
A corporation must have Articles of Corporation which state the business purpose. However, corporations should also adopt bylaws to provide for the daily running of the business and explain how officers and directors are appointed, as well as their powers.
Full-Service Law Firm
At Brezina Law, we can help with all aspects of entity formation. For example, we can help you obtain necessary business licenses, tax identification numbers, and other required documents. Without these, a business cannot open its doors.
We can also draft buy-sell agreements which protect the ownership in the event of death, retirement, or divorce. For example, a partner who divorces might need to divide his partnership interest with his spouse under Tennessee’s equitable division law. A buy-sell agreement protects a company by laying out a smooth succession plan.
To get started, contact our experienced Knoxville entity formation attorneys at Brezina Law today to schedule a consultation.