Choosing and Forming A Business Entity
You’ve decided to start your own business, but how do you determine how to do that legally? Which type of business entity is best suited to your purposes and how will you put it into place? There are several different structures available under Pennsylvania law. The entities are sole proprietorships, general partnerships, limited partnerships, limited liability companies, and corporations. Each structure has different financial and ownership responsibilities, advantages, and disadvantages. While it is important to have a full understanding of what each structure entails, this quick overview may help in narrowing down which type is right for your business.
Sole Proprietorship: In a sole proprietorship, full control and liability for the business are established under one owner. This is the most common ownership type. While this structure gives all profit to the owner, it also holds the owner and his/her personal assets responsible for debts or other liabilities of the business.
General Partnership: Two or more owners are completely in charge of the business. This entity also assumes all owners are personally liable for debts of the business. An informal agreement may be made to set up a partnership, however it is best to have a written agreement outlining how you will handle the issues your business may face.
Limited Partnership: In a limited partnership, there are one or more general partners along with one or more limited partners. General partners are in charge as before, while limited partners are not involved in daily operations of the business and are shielded from personal liability. The partners can be individuals or legal entities.
Limited Liability Company: An LLC is a variation of a corporation. The value of Members’ ownership interests is increased or decreased in proportion to ownership percentage; however there is no personal liability.
Corporation: A corporation can be the most difficult entity to establish. Owners are often restricted to specified business activitities. However, similar to an LLC, the value of a shareholder’s stock interest increases or decreases in proportion to ownership percentage and there is no personal liability.
Still unsure which type of business is right for you? Avoid making this and other types of legal mistakes and contact us today.
Make sure you follow all the laws associated with the business structure you decide to use, and avoid these Top 5 Legal Mistakes Most Small Businesses Make.
- Not knowing the law
- Not understanding documents you sign
- Cutting corners on legal advice
- Doing business without adequate legal documents
- Neglecting intellectual property issues
Interview with an Entrepreneur
In each newsletter we interview one of our clients who has an entrepreneurial spirit to be admired.
Name: John W. Ingold, Jr., D.V.M.
Title: Practice Owner
Company: Ingold Veterinary Hospital, Inc.
Website: www.ingoldvet.com
- Tell our readers about what you do:
I am the owner/operator of a small animal veterinary hospital offering 34 years of expertise in preventive, wellness, and dental care and soft tissue surgery to patients throughout the York Community. - What would you say are the top three skills needed to be a successful entrepreneur?
Vision; hard work and lots of it; and an undying passion for your chosen field or profession. - What is the best way to achieve long-term success?
First, I think you have to define success. For me, it involves complete dedication to animal health care and healing. I also believe in strong business management, focusing upon offering excellence in client services and value in each and every visit. It’s also about business integrity, always doing what is in the patient’s best interests; and always giving back to the community either at large or to individuals who just need some help now and then. It’s about going home at the end of the day feeling satisfied. For me, that equates success. - What have been some of your failures, and what have you learned from them?
Personally, I don’t know that I would call them failures, rather adversarial circumstances almost always offer a business or life lesson. It’s part of the learning curve in business and life. But perhaps to answer more specifically, I would say not acting on my instincts and not knowing or understanding my limitations. Further, perform due diligence in all things; don’t take shortcuts. This also involves hiring the best person for the job. I failed to recognize that a passion for animal health care cannot be taught. If it isn’t there, move on. - Do you have a favorite motivational quote?
Actually, I have three: “Vision is the evidence of things not seen…, the result of being absolutely convinced of goals not yet attained, evidenced by the willingness to stake years of your life on the promise of things to come.” “Rescuing one dog or cat may not change the world, but for that animal their world is changed forever.” And finally, “Quality never goes out of style.” For me, all are true and timeless. - What has been your most satisfying moment in business?
The acquisition of a private practice in decline in 2007 and expanding the client base during a challenging economy. But the question is also relative to the overall journey of animal health care on a daily basis. It feels extremely satisfying being able to relieve pain and suffering and educating clients along the way which ultimately benefits the patient. Each day, for me it involves truly advocating for those who cannot advocate for themselves and learning to enjoy both the daily successes and manage the sorrows. - Where do you see yourself and your business in 10 years? 20 years?
In 10 years – well, I’m almost sixty now but hopefully, semi-retired and working with a business partner who shares my standards of patient care and ethics. In 20 years — fishing on the St. Lawrence as often as possible. - What three pieces of advice would you give to an aspiring entrepreneur?
Never stop learning, never give up, and don’t be afraid to fail.
York, Pennsylvania 17403