Starting a new business is an exciting time. You have an excellent idea and are ready to make it a reality. What too many new business owners fail to do is protect their legal rights and personal assets. Business owners should understand the differences between LLCs, corporations, and sole proprietorships so they can make an informed decision.

At Kondori & Moorad, LLP, our experienced business formation attorneys help you choose the right business type for you. We walk you through the benefits of each company type and which option best fits your needs.


Many new business owners are unfamiliar with different formation types, and why they matter. Forming your business a certain way can offer you several benefits, some of which apply more to one type of business than others.

Forming your business correctly can offer potential benefits such as:

  • Personal protection of your assets from a lawsuit
  • Taxation benefits
  • Ability to manage multiple owners or shareholders
  • Sets forth a contractual agreement that protects each owners’ rights

Your business attorney can help you get off the ground, or properly form your already existing business. You can use these advantages to protect yourself and the company you built.


A sole proprietorship occurs when a person never forms a business entity. It is the default business form in which the individual owner operates the business as themselves. Under state law, you are your business for all intents and purposes.

A sole proprietorship offers no legal protections to you or your assets. It is the riskiest business type, and one too many small business owners utilize. The owner is individually liable for the business’ debts and liabilities. This means that your personal assets—such as your home, car, and bank accounts—are all on the line if you default on a debt or are sued.

This lack of protection makes a sole proprietorship a poor choice for your business. Choosing another formation option is highly recommended.


A corporation is a formed legal entity most often used by large companies. These large companies often want to go public with an initial public offering (IPO) in order to raise large sums of capital.

The owners of a corporation are its shareholders. The shareholders own individual shares, sometimes in different class types. The corporation must also:

  • Elect a Board of Directors
  • Elect corporate officers
  • Hold an annual meeting
  • File legal documents with the state
  • Comply with other legal requirements

Corporations are best for those that want to seek significant outside investment or take the company public. Whether this option is best for your business is a decision your attorney can help you make.


A limited liability company harnesses the advantages of both corporations and sole proprietorships, while continuing to provide significant asset protections. An LLC is a legal entity that is its own legal “person.” It can hold assets, do business, sign contracts, and much more without creating individual liability for the owners.

Owners of an LLC are referred to as “members.” Many small businesses are owned by one member, and are called single-member LLCs. Others may have two or more members, referred to as multi-member LLCs.

LLCs offer countless benefits to both small, medium, and large-sized businesses. These include:

  • Creating a separate legal identity for your business
  • Protecting your personal assets and limits personal liability
  • Providing flexible management structure under your formation documents
  • Enabling pass-through taxation that avoids the double taxation corporations face


At the law firm of Kondori & Moorad, LLP, our skilled business formation attorneys can analyze your business to pick the right formation type. We understand the potential benefits and limitations of each, and how they apply to your unique business. Contact us today to speak with our team.

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