BUSINESS LAW IN MISSOULA, MT
There are three main types of business entities. Choosing which is right for one’s business has long term financial impact. The three main types are Sole Proprietorship, Partnership, and Corporation.
A Sole Proprietorship is a business owned by one person. The sole proprietor may have numerous employees and he or she may or may not manage the business on a daily basis. The sole proprietor is personally responsible for the debts of the business and if the business is sued, the sole proprietor is financially responsible for that law suit.
A Partnership is two or more people engaged in an enterprise for the purpose of making a profit. There are four kinds of partnerships; GP, LLP, LLLP, and PLLP. GP is a general partnership and the partners are liable for the partnership debts. LLP is a limited liability partnership and the partners are liable for partnership debts only to the extent of their holding in the partnership. LLLP is a limited liability limited partnership and consists of one or more general partners and one or more limited partners. PLLP is a professional limited liability partnership and is available only to licensed professionals such as lawyers, doctors, architects, engineers, and accountants.
A Corporation is a legal entity separate and apart from the individuals who own it. There are four kinds of corporations; C Corporation, Subchapter S Corporation, LLC, and PLLC. A C Corporation is taxed at the corporate level. A Subchapter S Corporation’s earnings are passed through to the personal income tax return of the corporation’s owners. A LLC, (limited liability corporation) may elect to be taxed at either the corporate level or the personal income tax level. A professional limited liability corporation is available only to licensed professionals such as lawyers, doctors, architects, engineers, and accountants.
Succession Planning is the exercise of thinking and talking through a series of what ifs, such as what if I die, what if my partner has a stroke, what if the business needs an infusion of additional capital, what if one of the owners wants to sell their interest to their son-in-law, and so on. By talking through various scenarios before they happen, one is able to construct thoughtful plans that will preserve one’s investment in the business.