When you first start your own business, there’s a chance that you didn’t give much thought to how it was organized. Or, even if you did, the needs of your business can change over time, and what worked for your company when it was first starting out might not work now. Either way, there’s a decent chance that your current business organization needs an overhaul, and here’s how you can tell.
First, you may have recently found your tax burden went up significantly due to entering a new tax bracket, or because of recent changes in the tax law. Whether you’re paying more taxes because you’re making more money, or because the rules regarding taxes have changed, it’s worth reconsidering your business structure to lighten your tax burden. Even knocking a few percentage points off your tax rate can make a big difference to your bottom line.
Second, as your business grows and you make more money and employ more people, you might become subject to new regulations that didn’t affect you before. For example, Title VII of the Civil Rights Act, which prohibits discrimination based on race, sex, color, religion or national origin, only applies to businesses with fifteen employees or more. The same is true of the Americans With Disabilities Act. If your business isn’t built to handle the new liabilities that come with that growth, you could one day wake up to a nasty surprise from an irate employee or testy regulator.
Finally, you may find that your current business model doesn’t give you the flexibility you need for your growing business. For example, let’s say you initially organized your business as a Limited Liability Company (LLC), for one reason or another. Although this initially suited your needs, you have found yourself thinking about selling your interest in the company. Unfortunately, selling an interest in an LLC often can only be done with the permission of all other members of the LLC, which can make the process incredibly difficult. If you reorganized your business as a corporation, however, selling your interest in the company might be as simple as selling your shares and walking away.
As your business grows and changes, it’s important to periodically reexamine how your business is organized. If you are considering reorganizing your business, you should contact a skilled New York business law attorney. The New York business lawyers at Blodnick, Fazio & Clark are experienced legal professionals who can assist and guide you through the process. For more information or to schedule a consultation, contact our Long Island business lawyers at (516) 280-7105 or (631) 669-6300.