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How to Choose the Right Legal Structure for Your Business

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Are you looking to start your business but need help determining what legal structure is best for you? Do you want to know more about the advantages and disadvantages of each of these different business entities? There are over 902,000 small businesses in Michigan, and at one point, they have all wondered the same things.
There is no need to worry, though! The Cronin Law Firm has you covered with all you need to know about the available business entities you can incorporate to make the best decision for your business.

Different Business Entities

There are five main business entities you can choose from. Each legal structure comes with its disadvantages and advantages.

Limited Liability Company

With an LLC, you can protect your business from any personal assets in the event that someone tries to sue your company. This also means that your business taxes and debts are separate from your own personal tax and debts.
Another excellent benefit of incorporating it into an LLC is pass-through taxation. This means that the profits the business makes are not subject to corporate taxes; they are, instead, treated as the business owner’s personal income.
A limited liability company has many excellent benefits, but they are more expensive to incorporate, depending on your state. For example, in Texas, it costs about $300 to incorporate, whereas, in Michigan, it costs about $50 to incorporate as an LLC.
 Sole Proprietorship
A sole proprietorship is one of the most straightforward legal structures for a business. In this type of business entity, there is only one person who operates as the operator and owner of the company.
When you start a business, you are automatically considered a sole proprietor unless you change the business into another business entity. A benefit of being a sole proprietor is that you don’t have to file formal paperwork to incorporate your business or any business tax returns.
Because you operate as the owner and the operator, consider your business and personal assets to be one and the same. This could also be a curse for you, though. Because the government sees you as one entity, your personal assets could be at risk if someone tries to sue your company.


An S-Corporation combines some benefits that an LLC offer with that of a corporation. For example, like an LLC, an S-Corp functions as a pass-through entity, and like a corporation, an S-Corp pays dividends to owners, which can help reduce payroll tax liability. S-corps have board meeting requirements, which can be a drawback for some businesses.


A c-corp comes with many excellent benefits and offers the most significant level of separation between the owners and the business. Still, it is more complex than the other business entities.
In this type of legal structure, business owners don’t have any financial or legal liability for things related to the business. They also have the opportunity to take the most tax deductions. Unlike an S-Corp, a C-Corp can offer stock options.


A partnership is like a sole proprietorship, but the main difference is there is more than one owner. In a general partnership, you divide the business profits, legal liabilities, and losses between the partners involved in the business. In a limited partnership, there are some active members and some silent members who invest in the business.

Starting a Business in Michigan

If you want to start a business in Michigan, there are many things you need to consider. Not only do you need to pick a legal structure, but you also need to consider tax implications and liability protection.
To ensure that your business has all it needs, you can reach out to a business lawyer. They can help you create your business plan and help you choose the correct business entity for your business concept.

How To Find a Business Lawyer

A quick online search may overwhelm you with many different Michigan business attorneys, but there is no need to worry. When looking for the right Michigan business lawyer, look at their reviews.
See what other clients liked or did not like about working with a specific attorney. You can also reach out to the lawyer to schedule a free consultation. Most reputable lawyers provide their clients with free no, obligation consultations so they can better understand your needs and what your business is about.

Make Sure They Are Business Lawyers

There are many different types of lawyers out there—some practice criminal law, while others practice tax or family law. When looking for an attorney, ensure they have their business law license.
They need their license in this type of law, and they should also have experience practicing business law. When you work with a reputable team of attorneys, such as the Cronin Law Firm, you can rest assured that you are working with lawyers who know what they’re talking about.

Get Help Choosing the Right Legal Structure

When starting a new business in Michigan, knowing what legal structure to go for is essential. There are so many benefits and disadvantages that come with the different types of business entities, and one option may be better than the other.
If you are unsure what option is best for you and your business, it is best to work with a reputable business lawyer who can point you in the right direction. To make sure your business gets started on the right foot, contact us for more information. We are here to answer any questions or concerns you may have.


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