STARTING, EXPANDING, RELOCATING A BUSINESS IN MINDEN
To legally establish your new business you will need to determine the type of business structure that you will use.
Whether you are starting a new business, expanding your current business, or simply relocating your business— we are here to help!
Starting a small business requires patience, focus, and smart planning. If you are thinking about starting a business, develop a business plan. You can get assistance free of charge from the Louisiana Small Business Development Center Network: Click here for the LSBDC
You can also make an appointment with the Economic Development Department of the City of Minden for information and counseling on how to get started and survive in business.
Obviously, being able to finance a small business is extremely important. After the business plan has been developed, check out the Small Business Administration. It is important financing source for many types of small businesses. Click here for SBA Lending Programs
LEGAL FORMS OF BUSINESS
Each form of business has its advantages and disadvantages as well as tax consequences of which you should be aware. You must decide which of these structures best suits your business objectives and needs.
• SOLE PROPRIETORSHIP
• LIMITED LIABILITY COMPANY (LLC)
• LIMITED LIABILITY PARTNERSHIPS (LLPs)
• SUB CHAPTER S CORPORATION
A sole proprietorship is an unincorporated business with one owner who pays personal income tax on profits from the business. With little government regulation, they are the simplest business to set up or take apart, making them popular among individual self-contractors or business owners. The disadvantage of a sole proprietorship is obtaining funding specifically through established channels, such as equity (selling shares) and obtaining bank loans. As a business grows it often transitions to another form of business.
A partnership is a structure appropriate to use if you are not going to be the sole owner of your new business. It is an arrangement by which partners conducting a business jointly have unlimited liability, which means their personal assets are liable to the partnership’s obligations. Since all partners have unlimited liability, even innocent partners can be held responsible when another partner commits inappropriate or illegal actions.
This business structure protects the owner’s personal assets from financial liability and provides some protection against personal liability. There are situations where an LLC owner can still be held personally responsible, such as if he intentionally does something fraudulent, reckless or illegal, or if she fails to adequately separate the activities of the LLC from her personal affairs.You will need to file paperwork with the state if you want to adopt this business structure, and you will need to pay fees that usually range from $100 to $800 particularly if you use an attorney to file the documents.
LLPs are most commonly used by professionals such as doctors and lawyers. The LLP structure protects each partner’s personal assets and each partner from debts or liability incurred by the other partners. Although the general structure of LLP can vary, each individual is liable only to the extent of their invested capital. LLPs must file information returns with the IRS, but they do not file separate tax returns. For tax purposes, the partnership’s profits or losses pass through to its owners, so a partnership’s income is taxed at the individual level. LLPs are also state entities and must file paperwork and pay fees similar to those involved in establishing an LLC.
S corporations are pass-through entities, meaning that their income, losses, deductions and credits pass through the company and become the direct responsibility of the company’s shareholders. The shareholders report these items on their personal income tax returns, thus S corps avoid the income double taxation issue. Like the LLC, the corporate structure distinguishes the business entity from its owner and can reduce liability. However, Sub-Chapter S Corporations are considered more complicated to run because of tax, accounting, record keeping and paperwork requirements. Unless you want to have shareholders or your potential clients will only do business with a corporation, it may not be logical to establish your business as a Sub-Chapter S Corporation from the start.