Back
Back
Back
Back
Back
Back
Back
Back
Back
Back
Back
Back
Back
Back
Back
Back
Back
Back

Know the Law: How Should I Structure My New Business?

Written by: Amelia E. Elacqua

Published in the Union Leader (1/26/2019)

Q: I recently started a new business in New Hampshire. What is the best way to set up my business that is simple, yet enables me to grow the business in the future?

A: Congratulations on starting your own business! There are many ways to structure a new business in New Hampshire. A sole proprietorship is the simplest business to form and operate; however, often a limited liability company, or “LLC,” is preferable because it provides for the liability protection of a corporation and the tax advantages of a partnership.

1) Limited liability: One of the key benefits of the LLC is that it separates the business from the individual both financially and legally. In a sole proprietorship, your assets and the business assets are one and the same, meaning your home, your car, even your personal bank accounts are exposed to creditors of your business. As the owner of an LLC, your liability is limited to the amount of your investment in the business (assuming you have not personally guaranteed any debt).

2) Growth and succession planning: As your business grows, you may want to take on additional partners or delegate roles and responsibilities. Forming an LLC initially, with clear and predetermined terms, can help minimize the risk inherent in sharing control of your business. Forming an LLC with multiple owners (referred to as “members”) can be much more complicated and cumbersome compared to adding members to an existing LLC. An LLC can also survive long after you retire or sell the business.

3) Taxation: In a sole proprietorship, the profits and losses from the business are reported on your individual tax return; this is called “pass-through” taxation. An LLC owner can choose whether to be taxed as an S corporation, a C corporation or as a pass-through. While most LLC owners choose pass-through taxation, this flexibility to choose the method that works best for your business is an important advantage to forming an LLC.

4) The final reason an LLC may be preferable to a sole proprietorship is that it sends the message that you are running a “real” business. Banks and other creditors, suppliers and even significant customers may be more likely to do busines or provide better terms to an LLC. Operating as an LLC also ensures that your business will be the only business with that name in New Hampshire.

Ultimately, the choice depends on your individual facts and circumstances and you should consult your accountant and legal counsel to go through the specifics of your business. Best of luck!

Amelia Elacqua can be reached at [email protected].

Know the Law is a biweekly column sponsored by McLane Middleton, Professional Association. We invite your questions about business law. Questions or ideas for future columns should be addressed to: McLane Middleton, 900 Elm St., Manchester, NH 03101 or emailed to [email protected]. Know the Law provides general legal information, not legal advice. We recommend that you consult a lawyer for guidance specific to your particular situation.

Integrity and trust

At McLane Middleton we establish and maintain long-standing relationships with our clients to help us better achieve their unique goals over time. This approach to building trust requires that our esteemed lawyers and professionals use their broad, in-depth knowledge and work together with integrity to ascertain sound resolutions to legal matters for their clients.

Strength in numbers

McLane Middleton is made up of more than 105 attorneys who represent a broad range of clients throughout the region, delivering customized solutions. As a firm we are recognized as having the highest legal ability rating. The firm is rated Preeminent by Martindale Hubbell and is recognized as one of the nation's leading law firms in Chambers USA. Our attorneys are distinguished leaders in their respective practice areas.

Meet Our People

Commitment and collaboration

McLane Middleton's versatile group of attorneys and paralegals become trusted authorities on each case through collaboration. We work with our clients to learn their individual needs first and foremost and, together, we develop comprehensive solutions to their specific legal matters. This approach helps us exceed our clients' expectations efficiently and effectively, client by client, case by case.

Practice Areas

A history of excellence

McLane Middleton was established in 1919 in New Hampshire, and has five offices across two states. However, deep historical roots don't allow you to become innate. Our firm is organized, technological, and knowledgeable. Our history means we are recognized. But our reputation is built on the highest quality of service and experience in very specific areas of law.

The Firm

Intelligence paired with action

Our team continuously seeks opportunities to enhance their professional development and put key learnings to action. The pursuit of further insight guides us to volunteer service opportunities, speaking engagements, and teaching roles. Our lawyers are sought after thought leaders across their industries, and recipients of leadership awards throughout the region.