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The beginning of a new business venture is multi-faceted, stressful, and complex. The decisions that you make during the business formation process will significantly affect your exposure to personal liability, professional liability, and the overall success of the company. Doing this without an experienced business attorney is a major risk that could cause you major headaches for years to come.
A business formation attorney must spot potential risks and advise clients on what paths are available to take. In the formation process, we help clients understand the future financial and legal impacts of their decisions so that they can feel prepared and secure. Our Philadelphia business lawyers have extensive experience counseling clients in a wide range of business types and industries. As your attorney, we will help you make the right decisions and will implement necessary legal measures on your behalf, allowing you to focus on growing and managing your business.
AttorneyX lawyers represent startups and entrepreneurs on a regular basis through all phases of development, through entity selection, corporate and capital structuring, financing, and regulatory compliance. Our experience representing successful start-ups allows us to devise realistic and cost-effective solutions for our client’s financial needs for growth and expansion, while preparing them for success with solid legal and business foundations.
What Business Lawyers Do
Most founders come to us with the same underlying question. They want to know which mistakes are expensive to undo later. Entity choice is one of them. Picking the wrong structure rarely causes problems on day one, but it surfaces years on, when you raise money, add a partner, or sell. We help you decide with that future in view, not just the filing in front of you. If you would rather talk it through than read on, our Philadelphia business lawyers offer a free consultation, and there is no obligation to retain us afterward.
At AttorneyX, our Philadelphia business formation lawyers advise clients in two major areas: risks and opportunities. Within both of these opposing worlds there are legal maneuvers that clients can make to maximize their opportunities while minimizing their risks. We take pride in offering essential services where we explore issues relating to tax liability, exposure of personal liability, business flexibility and durability, licensure requirements, and operational success.
We offer the following services:
- Helping you select an entity (LLC vs. corporation)
- Filing your Articles of Incorporation (for C-Corps and S-Corps)
- Filing your Certificate of Organization (for LLCs)
- Drafting operating agreements
- Drafting corporate bylaws and shareholders’ agreements
- Drafting partnership agreements
- Drafting and maintaining shareholder agreements and minutes of shareholder meetings
- Securing IRS EIN tax IDs
- Advising on setting up business banking
- Procuring a registered agent service
- Procuring a virtual office
- Helping you select the right insurance policy
- Crafting a loss prevention policy
- Ensuring regulatory compliance and licensing
- Drafting profits interest agreements and equity incentive plans
- Advising on non-profit formation and governance
- Advising on tangential issues such as wills and trusts
What Business Entity Should I Choose?
Selecting your business entity type is one of the most important decisions you’ll make when starting a business. Every option comes with unique benefits and potential downsides. At AttorneyX, we can help you pick which type of entity is best for your current situation and future goals.
Sole Proprietorship
As the simplest and most common structure chosen to start a business, a sole proprietorship can be a great introduction into entrepreneurship. It is an unincorporated business owned and run by one individual with no distinction between the business and the owner. The owner is entitled to all profits and is responsible for all of the business’s debts, losses and liabilities. We rarely recommend this type as a long-term solution for businesses, however, due to its lack of liability protection.
Corporation
There are two types of corporations: C corporations and S corporations. The C corporation is the default corporation under IRS rules. The S corporation is a corporation that has elected a special tax status with the IRS and therefore has some tax advantages. Both business structures get their names from the parts of the Internal Revenue Code that they are taxed under.
Limited Liability Company
An LLC is a business structure that offers limited liability protection and pass-through taxation. As with corporations, the LLC legally exists as a separate entity from its owners. Therefore, owners cannot typically be held personally responsible for the business debts and liabilities. The LLC is viewed as a very flexible and durable entity which is used by small businesses and Fortune 500 companies alike. It may be a great fit for your business as well.
Partnership
A partnership is a business that has multiple owners. It’s not a legal business entity, and it doesn’t have to be registered with the state. Essentially, if you decide to go into business with another person without filing any state paperwork, you’re automatically in a partnership. There are four types of partnerships: general partnerships, limited partnerships, limited liability partnerships, and limited liability limited partnerships.
How Do I Form a Business in Pennsylvania?
Forming an entity in Pennsylvania is a state-level process, and the paperwork depends on the structure you choose. An LLC files a Certificate of Organization with the Pennsylvania Department of State. A corporation files Articles of Incorporation. A general partnership files nothing to exist, which is exactly why it carries the most personal risk.
One Pennsylvania requirement catches many new owners off guard. Most domestic and foreign filing entities, including LLCs and corporations, are now subject to an annual report obligation with the Department of State, a change that replaced the old decennial filing. Missing it has consequences over time, so we calendar these dates for clients and handle the filings as part of formation.
Entity choice also drives how you are taxed and how you pay yourself. The difference between a C corporation, an S corporation, and an LLC is not cosmetic. It changes your filing obligations, your self-employment tax exposure, and your flexibility to bring on investors. We walk through the tax implications with you before you commit, because reversing the choice later is the costly part.
Business Formation FAQs
Do I need a lawyer to form an LLC in Pennsylvania?
No law requires it. You can file the Certificate of Organization yourself. What a lawyer adds is the operating agreement, the ownership and voting terms, and the tax election that the state filing does not cover. Those are the documents that decide what happens when owners disagree or someone wants out, and they are far cheaper to get right at the start than to litigate later.
How much does it cost to start a business with a lawyer?
It depends on the structure and how many owners are involved. A single-member LLC is straightforward. A multi-owner corporation with equity terms and investor documents takes more work. We give you a clear scope before we begin, and every consultation is free, so you can get a real estimate before deciding.
What is the most common formation mistake you see?
Going into business with a partner on a handshake. A partnership exists the moment two people start a business together, with no paperwork and full personal liability for each partner. We see the fallout when the relationship sours and there is nothing in writing governing money, control, or exit. A short founders’ agreement prevents most of it.
Ready to Get Started? Contact a Business Formation Lawyer in Philadelphia
There’s so much more we want to tell you about forming a business if you’ll give us the chance! If you’re ready to receive experienced business law formation advice, don’t hesitate to reach out today. We can’t wait to meet you. Did we mention every consultation is free?
