Whether your business is just beginning, moving, reorganizing, or growing, the specialized business formation attorneys at Padway & Padway Law Offices know how to assist you. We understand how difficult it can be to navigate the legal components associated with starting or growing your business. Our corporate lawyers will help you structure your business to meet its individualized needs.

Sole Proprietorship

 A sole proprietorship is a type of business structure that is owned and operated by a single individual. In a sole proprietorship, the owner is personally responsible for the debts and liabilities of the business. This means that the owner's personal assets, such as bank accounts and property, are at risk if the business is unable to pay its debts.

 A sole proprietorship is the simplest and most common type of business structure. It is not a separate legal entity from the owner, which means that the owner and the business are considered to be the same for legal and tax purposes. This means that the owner is personally liable for the debts and liabilities of the business, but it also means that the owner has complete control over the business and its operations.

 The main advantage of a sole proprietorship is its simplicity. It is relatively easy and inexpensive to start and operate a sole proprietorship, and the owner has complete control over the business. However, the main disadvantage is the lack of liability protection. The owner's personal assets are at risk if the business is unable to pay its debts, which can be a significant financial risk.

 It's a good idea to carefully consider the pros and cons of a sole proprietorship before deciding to start one. In the vast majority of cases, a different business structure is a better option due to the liability protection they offer. It's a good idea to consult with a business attorney or tax professional to determine the best option for your business.

 Partnership

 A partnership is a type of business structure in which two or more individuals or entities come together to carry on a business. In a partnership, the owners are called partners, and they share in the profits and losses of the business.

 There are several different types of partnerships, each with its own unique characteristics. The most common types of partnerships are general partnerships, limited partnerships, and limited liability partnerships (LLPs).  In a general partnership, all of the partners are personally liable for the debts and liabilities of the business. This means that the personal assets of the partners, such as bank accounts and property, can be seized to pay off the partnership's debts.

 In a limited partnership, there are both general partners and limited partners. The general partners are personally liable for the debts and liabilities of the business, while the limited partners are not. Limited partners are typically only liable for the debts and liabilities of the partnership up to the amount of their investment in the business.

 In a limited liability partnership (LLP), some or all of the partners have limited liability. This means that their personal assets are generally not at risk if the partnership is unable to pay its debts. LLPs are often used by professionals, such as lawyers and accountants, who want to limit their personal liability for the actions of the partnership.

 In Wisconsin, partnerships are generally taxed as pass-through entities, meaning that the partnership itself is not subject to income tax. Instead, the income, gains, losses, deductions, and credits of the partnership are passed through to the individual partners, who report their share of the partnership's items on their own tax returns and pay tax on them at their individual tax rates.

 Each partner in the partnership should receive a Schedule K-1 from the partnership, which reports the partner's share of the partnership's income, gains, losses, deductions, and credits. The partner will use this information to complete their individual tax return, including Form 1040 and any other relevant forms or schedules.

 It's important to note that while the partnership itself is not taxed, it may be required to file an informational return, such as Form 1065, which reports the partnership's financial information to the Internal Revenue Service (IRS). This is done for informational purposes only, and does not result in the partnership itself being taxed.

 It's also worth noting that while most partnerships are taxed as pass-through entities, there are some exceptions. For example, a partnership may elect to be taxed as a corporation by filing Form 8832 and making an election to be taxed as a C corporation or an S corporation. In this case, the partnership would be subject to corporate income tax, rather than being taxed as a pass-through entity.

 It's a good idea to consult with a business attorney to determine which type of partnership is best for your needs, and to understand the specific rules and regulations that apply to partnerships in your state.

 Limited Liability Partnership

 A limited liability partnership (LLP) is a type of partnership in which some or all of the partners have limited liability. This means that the personal assets of the partners are generally not at risk if the partnership is unable to pay its debts.

 In a regular partnership, all of the partners are personally liable for the debts and liabilities of the business. This means that the personal assets of the partners, such as bank accounts and property, can be seized to pay off the partnership's debts. In an LLP, however, only the partners who are designated as having limited liability are protected from personal liability for the debts and liabilities of the partnership. The other partners, known as general partners, may still be personally liable for the partnership's debts.

 LLPs are often used by professionals, such as lawyers and accountants, who want to limit their personal liability for the actions of the partnership. However, not all states allow LLPs, and the rules for forming and operating an LLP can vary depending on the state.

 It's a good idea to consult with a business attorney to determine if an LLP is a suitable business structure for your needs and to understand the specific rules and regulations that apply in your state.

 Limited Liability Company

 A limited liability company (LLC) is a business structure that offers the benefits of both a corporation and a partnership.  Ownership is divided into units that are owned by the members of the LLC.  Owners are called members and they have limited personal liability for the debts and liabilities of the business. This means that their personal assets, such as bank accounts and property, are generally not at risk if the business is unable to pay its debts.

 In Wisconsin, LLCs are formed by filing articles of organization with the Wisconsin Department of Financial Institutions. There are certain requirements that must be met in order to form an LLC in Wisconsin, such as having a registered agent and having a unique name that is not already in use by another business.

 There are several potential benefits to forming an LLC for your business. One of the main benefits is the limited liability protection that it offers to the members. As mentioned above, the personal assets of the members are generally not at risk if the business is unable to pay its debts. This can provide peace of mind and can help protect the members from financial risk.

 Another potential benefit is the flexibility of an LLC in terms of management and ownership. Unlike a corporation, which has strict rules governing how it must be managed and how ownership is represented, an LLC has more flexibility. Members can decide how the LLC will be managed, either by the members themselves or by managers that they appoint. And ownership in an LLC can be represented by units, which can be divided and distributed in any way that the members choose.

 Additionally, LLCs can offer tax advantages depending on the circumstances of your business. A limited liability company (LLC) is typically taxed as a pass-through entity, which means that the business itself does not pay taxes on its profits. Instead, the profits of the LLC are passed through to the members and are taxed at the individual level. This is known as "pass-through taxation," and can potentially save your business money on taxes, compared to a corporation which is taxed at the corporate level.

 In some cases, an LLC may choose to be taxed as a corporation instead of a pass-through entity. This is known as "electing corporate tax treatment," and it can be done by filing Form 8832 with the Internal Revenue Service (IRS). If an LLC elects corporate tax treatment, it will be subject to the same taxes as a regular corporation, including corporate income tax and the potential for double taxation of dividends.

 It's important to note that the way an LLC is taxed can vary depending on the number of members it has and the type of members it has. For example, a single-member LLC (one that has only one owner) is typically treated as a disregarded entity for tax purposes, unless it elects corporate tax treatment. This means that the profits and losses of the LLC are reported on the individual tax return of the member, and the LLC itself is not taxed separately.

 In contrast, a multi-member LLC (one that has more than one owner) is typically treated as a partnership for tax purposes, unless it elects corporate tax treatment. This means that the profits and losses of the LLC are passed through to the members and are taxed at the individual level. The LLC itself is not taxed separately, but it must file an informational return (Form 1065) with the IRS each year to report its income and expenses.

 Overall, there are several potential benefits to forming an LLC for your business.  Ultimately, the way an LLC is taxed will depend on a number of factors, including the number of members it has, the type of members it has, and whether it has elected corporate tax treatment.  It's a good idea to consult with a tax professional to determine the tax implications of forming an LLC for your business and whether an LLC is the right choice for you.

 Corporation

 A corporation is a type of business structure that offers liability protection to its owners. In a corporation, the owners are called shareholders, and they are not personally responsible for the debts and liabilities of the business. This means that their personal assets, such as bank accounts and property, are generally not at risk if the business is unable to pay its debts.

 A corporation is a separate legal entity from its owners, which means that it can enter into contracts, incur debts, and be sued in its own name. It is also subject to corporate income tax, which means that the business itself pays taxes on its profits. Any profits that are distributed to the shareholders in the form of dividends are also subject to individual income tax.

 There are two main types of corporations: regular corporations and S-corporations. A regular corporation is the most common type of corporation, and it is formed by filing articles of incorporation with the appropriate state agency. An S-corporation is a regular corporation that has elected to be taxed under Subchapter S of the Internal Revenue Code, which allows it to be taxed as a pass-through entity.

 A potential disadvantage to forming a corporation is double taxation of dividends and the requirement for formal management structures. It's important to note that there are different tax rates for different types of corporations, such as S corporations, C corporations, and personal service corporations. In addition, there may be special rules or exemptions that apply to certain types of corporations, such as those engaged in certain types of business activities or those that meet certain criteria.

 It's also worth noting that while most corporations are subject to corporate income tax, there are some exceptions. For example, certain types of corporations, such as tax-exempt organizations and cooperatives, may be exempt from corporate income tax. Corporations may also be eligible for credits, deductions, and other tax benefits that can reduce the amount of tax they owe.

 Overall, a corporation is a popular business structure that offers liability protection and potential tax advantages to its owners.  It's a good idea to consult with a business attorney or tax professional to determine if a corporation is the right choice for your business.

 S-corporation

 An S-corporation is a regular corporation that has elected to be taxed under Subchapter S of the Internal Revenue Code.  This means that the business itself does not pay taxes on its profits. Instead, the profits and losses of the business are passed through to the shareholders and are taxed at the individual level.  This is known as "pass-through taxation," and it is one of the main advantages of an S-corporation over a regular corporation, which is taxed at the corporate level.

 Another key difference between a regular corporation and an S-corporation is the ownership structure. In a regular corporation, ownership is represented by shares of stock. In an S-corporation, there are certain restrictions on who can be a shareholder, such as the requirement that shareholders be individuals and not corporations or partnerships.

 There are several potential benefits to electing S-corporation status for your corporation. One of the main benefits is that it can save your business money on taxes. Since the profits of an S-corporation are only taxed at the individual level, this can potentially reduce the overall tax burden on your business.

 It's important to note that the way an S-corporation is taxed can vary depending on the number of shareholders it has and the type of income it generates. For example, if an S-corporation generates passive income, such as interest or rental income, the income may be subject to special tax rules. Additionally, if an S-corporation pays salaries and wages to its shareholders, the salaries and wages must be reasonable and must be reported on the shareholder's individual tax return.

 Another potential benefit is that S-corporations offer flexibility when it comes to distributing profits. With a regular corporation, profits must be distributed to shareholders in the form of dividends, which are subject to double taxation. In an S-corporation, however, profits can be distributed to shareholders in the form of wages and salaries, which are only taxed at the individual level. This can provide more flexibility in terms of how profits are distributed and can potentially save your business money on taxes.

 Additionally, S-corporations can provide more personal liability protection for the shareholders than a regular corporation. In a regular corporation, the shareholders are typically not personally liable for the debts and liabilities of the business. However, if the corporation is not managed properly or if it is not adequately capitalized, the shareholders could potentially be held personally liable. In an S-corporation, on the other hand, the shareholders are not personally liable for the debts and liabilities of the business, unless they have personally guaranteed the debts.

 Overall, there are several potential benefits to electing S-corporation status for your corporation.  Ultimately, the choice between a regular corporation and an S-corporation will depend on the specific needs and goals of your business. It's a good idea to consult with a business attorney or tax professional to determine the best option for you.