West Jordan Utah started out as a farming community. Today this community is home to many vibrant businesses. If you are seriously thinking of starting a business, seek the assistance of an experienced West Jordan Utah Corporate lawyer.
When you start a business, you are essentially setting up a for-profit organization. The for-profit organization is operated for the economic benefit of its owners; the profits of the business undertaking are passed through to them, such as by the payment of dividends on shares of stock. That is what is meant by the term for-profit organization: It is an entity that is designed to generate a profit for its owners. The transfer of the profits from the organization to its owners is pure private inurement—the inurement of net earnings to them in their private (personal) capacity. For-profit organizations are supposed to engage in private inurement.
Running a gallery, publishing business, art agency or simply being an artist in West Jordan, Utah, requires that you choose a form of business entity. It is very important that you select the right form of business entity. Each form of entity has its pros and cons. Some are based on legal issues, but many of them are tax generated. In order to properly evaluate what type of business entity you should use in structuring your business, it is imperative that you check with an experience corporate lawyer. The corporate lawyer will explain the pros and cons of each form of business entity. You can then choose the one most suited for your business
The nature and requirements of a business entity are locally generated. Utah like other states has its own laws. You will usually find that there are also county and local laws in West Jordan specifically dealing with business licenses with which you must comply. Simply hanging out a shingle without proper planning can cause you to lose thousands and thousands of dollars in taxes; to be responsible for things that you might not normally be liable for; and subject to fines and penalties. This is certainly a circumstance where the old adage of “penny wise and pound foolish” is true. If you get proper advice when initially structuring your business entity, you can prevent many legal and financial problems down the road. Of course, if you want to pay twice as much in taxes and be personally liable for any actions that you or any of your employees take, then your are fine to go ahead. On the other hand, if you wish to limit your tax liability as well as your personal liability, you should consult with an experienced corporate lawyer in West Jordan, Utah.
Forms of Business Entities
There are seven basic formats in which you can do business: sole proprietorship, general partnership, joint venture (JV), limited partnership, C corporation, S corporation and a limited liability company (LLC).
The limited partnership, corporations and limited liability companies are created by filing documents with the state. A sole proprietorship, a general partnership and a joint venture are generally created by the actions of the parties without the necessity of an official governmental filing.
Sole Proprietorship
A sole proprietorship–the simplest form of doing business–occurs when you simply do business by yourself. When you start working as an artist, an artist agent, a publisher or gallery, and you are working by yourself by default, you are a sole proprietorship. The sole proprietorship can have employees and hire independent contractors, but as long as there is only one decision-maker, it remains a sole proprietorship. It is a business entity that is virtually indistinguishable from its owner. If you are operating under a name that is different from your own, many states require the “fictitious business name” to be registered. Also, you will likely be required by local regulations in West Jordan to obtain some kind of license to operate either out of your own home or at a business premises. There is not much additional paperwork required by the State of Utah. Your tax return for your business is the same as the tax return you file for yourself–you simply add additional schedules. You are taxed at the same rate as an individual with the same deductions. You are also personally liable for all the debts of the entity, as well as for any liabilities that arise when you or your employees are acting in the scope of your business.
Partnership
A general partnership is formed when two or more individuals or business entities come together and work in furtherance of a common business goal. Partnerships do not necessarily have documentation that give rise to their creation or the management of their operations. It is, of course, highly recommended that when you go into business with another person or another entity that you draft partnership documents, which spell out the obligations, liabilities, transferability, responsibilities of each of the partners, as well as any buyout rights and post termination issues that might arise. Generally, the paperwork required by the state in regard to general partnerships is the same as that of a sole proprietor. For tax purposes, the partnership is not a taxable entity as such profits and losses of a partnership flow directly to the partners. The tax burden (profits and losses) generally follows the same percentage as the ownership interests in the partnership. One of the greatest risks in forming a partnership deals with liability. Each partner is not only liable for their own actions and those of the partnership employees, but they are liable for the acts of their partners. Even if you weren’t aware that your partner obligated the partnership on a contract or lease, or committed some act that created a liability, you are liable for your partner’s actions. It is not uncommon for the “innocent” partner to be straddled with the debts and obligations incurred by the “irresponsible” partner. Your partnership agreement can shift the burden of liability between the partners to the responsible partner, but as to third parties all the partners are liable. The lesson to be learned is to choose your partners very carefully and keep close tabs on their activities.
Joint Venture
The joint venture is very similar to a general partnership, but it is usually for a specific project or projects. It is considered a partnership in the eyes of the law with the same tax and liability consequences. It is simply much narrower in scope. But even though it is limited in duration and scope, the prudent business person will have a joint venture agreement in writing, outlining all of the responsibilities, obligations, and limitations of the agreement.
Limited Partnership
A limited partnership is an entity that is formed by the filing of documents with the state. In the limited partnership, there are two types of partners: general and limited. Together, they run the entity. The general partners make all the business decisions in regard to the entity’s business. The limited partners simply are investors. They invest specific sums and earn a return on their investment based on the proportion of their investment to the total size of the overall investments in the entity. They are not at risk for any additional funds no matter what happens. The general partners, on the other hand, are treated as regular partners and have unlimited personal liability for the debts and obligations of the partnership. The general partners incur the risk as the trade-off for control, while the limited partners give up management rights for limited liability.
C Corporation
A C corporation is a traditional corporation. It has stockholders, officers and board members. A corporation can be comprised of as few as three people or be as large as a publicly traded corporation with millions of shareholders and investors. Corporations are considered entities separate and distinct from their officers, directors, shareholders and employees. Generally speaking, if there is a debt or other obligation, only the corporations are liable. A creditor cannot come after an officer, director or shareholder to satisfy the obligations of the corporation. With that being said, there are exceptions to this rule, but the nuances of an individual’s liability in a corporation are outside the scope of this article.
However, two areas that should be mentioned here are copyright and taxes. When a copyright infringement occurs, those responsible for it in a corporation are often found to be personally liable along with the corporation. Corporations, since they are recognized as separate entities, are taxed just like any person. If the corporation earns profits, there is a corporate income tax. The corporate tax rate is usually lower than that of an individual’s tax rate. However, if the corporation pays taxes on its income and then distributes the post-tax profits to its shareholders in the form of dividends, then the shareholders pay taxes as well. As a result, there is double taxation. Sums paid to officers, directors and employees for their official duties are deducted by the corporation and, therefore, only subject to the single tax paid by the individual recipient of the funds. There are very complicated tax manoeuvres that can be accomplished in order to minimize the double taxation and actually reduce overall taxes in a corporate environment. However, those type of strategies need to be discussed at length with an experienced corporate lawyer.
S Corporation
An S corporation is also created by filing with the state, but is a bit of the hybrid. In this type of corporation, you get the standard corporate limitations on liability, but you are taxed as if you were a partnership. Even though the risk of double taxation disappears, on the other hand, you can be subject to taxes on what are known as “phantom income.” You don’t actually receive any money, but on the corporate books there is a profit. You are considered to have earned the money and have to pay taxes on income even though it has not actually been received. There are a number of other limitations in regard to the creation of this type of corporation, (i.e. there are limits to the number of shareholders, the nature, and type of shareholders, who can also be restricted).
Limited Liability Company
Probably the most popular form of business entity today is the LLC. It is a cross between a corporation and a partnership. It provides the limitations of liabilities found in corporations and the tax benefits of a partnership. There is much less public disclosure required in LLCs, and the paperwork is much less onerous than it is in any corporation. All that is required of you is to file initial documents with the state. After that, the ongoing filing requirements are much less than those required of limited partnerships or corporations. You can have as few or as many investors in the LLC as you would like. You can set up the operations of the LLC to be run by either a few active participants, or a much broader cross-section of the investors. Those who run any LLC are known as managers, and investors are referred to as members.
No matter which form of business entity one chooses, it is imperative that one carries the proper amount of insurance. Sole proprietors, general partners and joint ventures are all personally liable for the obligations of their entities, and insurance coverage can limit their exposure dramatically.
Whatever type of entity you select, choose your partners, directors, officers, and even shareholders wisely. They will greatly influence how you run your business, whether it will be successful and the types of economic and legal risks you will have. Choose them as carefully as you would choose your spouse because breaking up any business arrangement is just as messy as any divorce, and might even be more expensive.
There are several factors to take into account in selecting the form of business entity for your business. Given the reality of our litigious society, personal liability looms as a major element in the decision. Personal liability means that one or more managers of the business (its trustees, directors, officers, and/or key employees) may be found personally liable for something done or not done while acting on behalf of the business. If you are looking to start a business in West Jordan, Utah, speak to an experienced West Jordan Utah Corporate lawyer.
West Jordan Corporate Lawyer Free Consultation
When you need legal help regarding a business matter in West Jordan Utah, please call Ascent Law for your free consultation (801) 676-5506. We want to help you.
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506
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West Jordan is a city in Salt Lake County, Utah, United States. It is a suburb of Salt Lake City and has a mixed economy. According to the 2020 Census, the city had a population of 116,961,[5] placing it as the third most populous in the state.[6] The city occupies the southwest end of the Salt Lake Valley at an elevation of 4,330 feet (1,320 m). Named after the nearby Jordan River, the limits of the city begin on the river’s western bank and end in the eastern foothills of the Oquirrh Mountains, where Kennecott Copper Mine, the world’s largest man-made excavation, is located.
Settled in the mid-19th century, the city has developed into its own regional center. As of 2012, the city has four major retail centers; with Jordan Landing being one of the largest mixed-use planned developments in the Intermountain West.[7] Companies headquartered in West Jordan include Mountain America Credit Union, Lynco Sales & Service, SME Steel, and Cyprus Credit Union. The city has one major hospital, Jordan Valley Medical Center, and a campus of Salt Lake Community College.
City landmarks include Gardner Village, established in 1850, and South Valley Regional Airport, formerly known as “Salt Lake Airport #2”. The airport serves general aviation operations as well as a base for the 211th Aviation Regiment of the Utah Army National Guard flying Apache and Black Hawk helicopters.
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