"Form of business" refers to the way that an organization registers with the state. This basically involves the structure of the business, as well as how it is organized in terms of management, employees, and liability. One of the more common business forms is that of a corporation. There are also many different corporations, such as limited liability corporations (commonly referred to as an LLC).

Besides corporations, the form of business may appear as:

  • Partnerships
  • Sole proprietorships
  • Non-profit organizations
  • Small business organization

Each state may have different laws that govern the rules for setting up a business and registering it with the state. For instance, many states have very different tax applications depending on the form of business.

What Effect Does the Form of Business Have on an Organization?

The form of business can have dramatically different effects on the way the organization operates throughout the years. For instance, the form of business can influence other business legal issues such as:

  • Tax requirements and incentives
  • Liability for corporate violations (most members of a corporation won’t be held liable, because the corporation will absorb the liability)
  • Distribution of business rights/voting shares
  • Ownership of business property and assets

Also, each business form may be associated with various risks. For example, given that many people are employed by a corporation, a person who invests with a corporation will often experience less risk. On the other hand, a person who works under a sole proprietorship will usually have to absorb most of the risk.

Do I Need a Lawyer for Help with Form of Business Questions?

Choosing the right form of business can make all the difference concerning the success of your business in the long run. You may wish to hire a business lawyer if you need advice regarding the particular form of business that may be right for your situation. Also, you may need an attorney if you need help filing a lawsuit that involves business formations and other legal issues. Your lawyer can help represent you in court during the legal process.