According to recent data, there are more than 40 million independent workers in America, which makes up roughly 30% of the country’s workforce. Although the freelance economy offers many advantages, it comes with its share of challenges as well; business owners must choose the right corporate structure. Forming a corporation or LLC is relatively easy and quick, but most small business owners aren’t familiar with Missouri’s laws. Below are several mistakes a business law attorney in Effingham IL can help clients avoid.
Choosing the Wrong Entity
The S Corporation, C Corporation, and LLC are the three most prevalent business structures in the US. They have unique features, and choosing the right structure is crucial.
LLCs are good for small businesses needing liability protection, minimal formality, and little paperwork.
S Corporations are pass-through entities for federal taxes, and they’re good for eligible small businesses.
C Corporations file their tax reports and aren’t good for freelancers unless they plan to seek venture capital funding.
A business lawyer can help clients choose the right corporate structure for their needs.
Incorporating in Another State
Nevada and Delaware are popular places to incorporate. Delaware has some of the country’s most pro-business laws, and Nevada is popular because of its lack of personal, franchise and state corporate income taxes. However, these perks are more advantageous for large companies. If the company has fewer than five stakeholders, it makes sense to incorporate in Missouri, as it helps the business owner avoid fees and other hassles.
Incorporating Without the Right Business Licenses
An LLC or corporation isn’t the same as a business license, which most businesses are legally required to have. This may even be true for work-from-home freelancers, who should check with the local county office or city hall to determine licensing requirements. Most of these licenses are cheap to obtain, and they’re less expensive than paying fines for operating with no license.
Not Seeking Legal Advice
Business founders are at risk of making numerous mistakes, but one of the most serious is not having legal counsel. A business law attorney in Effingham IL can provide the legal advice an owner needs to start his or her business while remaining in compliance with state law. Learn more about us online or call the office to schedule a consultation.
