If you are considering starting a new business in Virginia, there are many considerations to take during the business formation process. New business owners in Virginia must first choose a business structure.
The business structure will determine how the business is taxed on the state and federal levels, how the owners are taxed on profit, and how the company can be held liable for its debt.
To learn more about the legal implications of starting a new business in Virginia, contact Virginia business lawyers today to learn how they can help your business get started.
Types of Business Structures
Selecting your business structure is an essential first step to starting your new venture. Each type of business structure offers unique advantages to the owner. Each type also places particular obligations on the owner, including tax obligations. Some types of business structures in Virginia include:
- Sole Proprietorships: the business owner also operates the business; the business owner is personally liable for the business debt and pays taxes on business revenue as personal income
- Limited Liability Company (LLC): provides unique legal protection for the business owners; the company owners (called “members”) are not held personally liable for any business debt
- General Partnership: business owners share operations responsibilities and profits, generally according to a partnership agreement; each business partner is personally liable for business debts and pays taxes on business revenue as personal income
- S-Corporations: a legal structure where the business owner(s) pays for all business income as personal income, though the company files an information tax return
- C-Corporations: the business is a legally distinct entity from the owners, so they are not personally liable for the business debt; the company is taxed separately from the owner(s), though the owner(s) may have to pay personal taxes on their company dividends
Virginia business attorneys can help their clients decide which business type will benefit them and the company most.
Steps to Forming a New Business
After selecting a type of business structure, there are other steps to take when forming a new business in Virginia. Before beginning operations, new business owners should take the following steps:
- Register the business with the state
- Apply for state and federal tax numbers
- Obtain any necessary license
- Draft a partnership agreement or other necessary business agreement
It is particularly important to draft and execute business agreements before opening doors. Business agreements, including leases, vendor agreements, partnership agreements between owners, and employee agreements can all help daily operations run smoother.
However, each of these agreements is legally enforceable contracts when valid. A Virginia business attorney can properly draft and review their client’s business agreements so that they can continue to move forward.
Protecting Companies in Court
If a vendor, contractor, employee, or other business partner fails to uphold their end of the agreement, the business owner may have cause to file a lawsuit for breach of contract.
This type of business dispute can be time-consuming, frustrating, and emotionally draining. When another party violates the agreement, the business could also face losses and potentially a damaged reputation.
How a Business Attorney Can Help
Rather than handle the dispute alone, your Virginia business attorney can represent your company’s best interests. In some cases, litigation might be unavoidable. In other cases, the dispute may be resolved out of court through neutral mediation.
Your business attorney can guide your decision to resolve the dispute out of court or to litigate. With your attorney’s managing the legal dispute, you can focus on running your business.
Contact corporate and small business lawyers to learn how they can help start and protect your business in Virginia.