Seglund Gabe Pawlak & Groth, PLC

Conveniently located in Wixom and Bloomfield Hills

  • Main office

    28345 Beck Road Suite 301 Wixom, Michigan 48393
    Phone: 248.869.0030
  • satellite office

    (by appointment only)
    41000 Woodward Avenue
    Suite 350 East
    Bloomfield Hills, MI 48304

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Business Law Insights: Which Business Entity Is Best for You?

22.05.2015 by Law Firm of Seglund Gabe Pawlak & Groth in Business Law


When creating a business, it is important to consult a business law attorney to understand the unique differences between each business entity type and determine which entity best meets your business needs.

The initial stages of starting a business are exciting because this is the time when you lay the foundation for future success. For many people, this early time of setting goals, creating products and services, and building towards the future are filled with excitement, enthusiasm, and energy. During this period of creative effort, it is also important that business owners invest the necessary time and attention into careful planning. By creating a solid business plan, owners are able to develop a strong foundation for their business so that it can grow in a sustainable and successful way into the future.

One essential component of business planning is deciding on the best type of business entity to use. It is important for business owners to consult a business law professional when deciding which kind of entity to form. There are four different kinds of business entities which each present their own list of positive and negative factors. These include:

Sole Proprietorship
This is the most common kind of business organization because it is easy to create and allows one owner to have complete control over the company. This person is able to make all financial, operational, and legal decisions for the business, but is also held personally liable for all business-related financial obligations. Also, an owner may be obligated to pay nearly twice the amount of Social Security and Medicare tax as they would as an employee.

This is another common kind of business entity that can be used for two or more individuals looking to start the business together. Like a sole proprietorship, there is no liability protection for the partners, and each one can still be held financially responsible for the actions and decisions of the other. A partnership is easy to create and may allow for reduced tax obligations.

This is a legal entity that is created as a means for conducting business. It is considered separate from the individuals who created it. A corporation protects the incorporators from personal liability and requires a greater depth of organization and paperwork. Domestic profit corporations are formed for the purpose of generating profits for its shareholders. Profit corporations may be formed in Michigan under the Michigan Business Corporation Act for any lawful purpose. Nonprofit corporations are those formed in which members may not receive any profits of the corporation. A nonprofit corporation is formed under theMichigan Nonprofit Corporation Act. Some purposes for which nonprofit corporations are commonly formed are those involving religious, educational and charitable activities.

Limited Liability Company
This type of business entity enables owners to be shielded from personal liability while still providing the legal and operational flexibility of a partnership. Limited liability companies are formed for the purpose of generating profit, while limiting taxes and liability. Limited liability companies have all the powers granted to a corporation. Professional limited liability companies must consist of at least one member who is licensed in each professional service being offered. If there is more than one member, they must all be licensed to provide the services of the company. Those professions which must form as a professional service limited liability company are dentists, osteopathic physicians, physicians, surgeons, doctors of divinity or other clergy and attorneys at law.

When deciding which kind of business entity to organize, it is important to consult a business law professional. At Seglund Gabe Pawlak & Groth, PLC we pride ourselves in helping clients form successful business entities and helping our business clients with all their legal needs.

Seglund Gabe Pawlak & Groth, PLC

At Seglund Gabe Pawlak & Groth, PLC we have helped area entrepreneurs and business owners build a solid legal foundation for long term success. Our attorneys are trained and experienced in business law, and understand that businesses built on a strong legal foundation have a better chance for long term growth and success. Many of the business relationships that our firm has established have lasted more than a quarter of a century, thanks to the skill and determination of our business attorneys who are dedicated to the success of our clients’ enterprises. Let us help you live out your dreams by being the law firm you call on when you start you own business or when your business needs assistance.

Seglund Gabe Pawlak & Groth, PLC

28345 Beck Road, Suite 301
Wixom, MI 48393
Phone: (248) 869-0030
Fax: (248) 869-0039

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