A closer look at the corporation business structure

A closer look at the corporation business structure

On Behalf of | Nov 15, 2018 | Uncategorized |

There are many decisions that must be made when choosing to start a Louisiana business. Financing, human resources and the state of the market must all be taken into consideration. Yet, one of the first decisions that must be made involves choosing a business structure. This initial step may seem basic enough, but it can shape the way a business operates for its entire life. Choosing a business structure without truly understanding it can leave a business and its owners at a disadvantage.

This week we will briefly look at the structure of a corporation. Corporations are included when articles of incorporation are filed with the state and bylaws are drafted. A corporation has many advantages. Perhaps the biggest amongst them is the fact that a corporation protection individual business owners from legal liability. Therefore, if a lawsuit or a bankruptcy, only the finances of the business can be attacked. A corporation may also be advantageous because it allows an individual to secure investors as a way to raise revenue. In addition, a corporation has an establish power structure with roles clearly defined. This can make establishing a management chain of command much easier.

Just like other business structures, though, there are some disadvantages to a corporation. To start, corporations are heavily regulated, which means that a number of formalities must be followed. Certain meetings must be held within specified periods of time, corporate activity must be logged and finances may be subject to speculation. Another concern with a corporate structure, especially when involving large business, is the fact that profits earned by the business are taxed, and then taxes are levied again when dividends are paid to shareholders.

If starting a business, then there are a lot to consider when choosing a business structure. Be sure to fully understand the advantages and disadvantages of each before choosing to move forward. If one would like assistance with this process and with drawing up sound legal documents that protect business’s structure, then it may be time to sit down with a skilled business law attorney.