While it may not seem especially important, how you choose to organize your business can have a substantial impact on how it runs. In some cases, it may mean the difference between turning a profit and taking a loss, and it may even affect your ability to continue doing business at all. Here are five reasons to consider a business reorganization for your company:
- You may need to protect yourself from liability
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- A common reason to consider a business reorganization is that you are concerned about legal or financial liability. For certain types of businesses, such as sole proprietorships or traditional partnerships, you may need to personally bear the burden of any legal or financial issues your company faces. However, certain business structures like corporations or LLCs can help shield your personal assets in the event you face litigation or other serious issues.
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- You can potentially save on your tax bill
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- Different types of businesses are taxed differently, and that can have a major impact on how big your company’s tax bill is at the end of the year. For example, income from corporations are subject to corporate income and capital gains taxes, while so-called “pass-through” entities have their revenue taxed as personal income. Ultimately, which is better will depend on your company’s specific situation.
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- You may need to expand your business
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- Ordinarily, when your business grows, it’s generally considered a good thing. However, certain types of businesses are better suited for expansion than others, and some are too inflexible to deal with this type of growth. If you find your business structure can’t handle how your company is growing, a reorganization may be in order.
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- You may need to reorganize after a merger or acquisition
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- Mergers and acquisitions can be messy at the best of times, and while they may be good for your business, they can also leave your company with major redundancies or conflicting structures. A business reorganization can be an important part of getting these issues sorted out, ensuring your newly expanded company is organized in a way that suits its needs.
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- Your current business organization no longer suits your needs
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- Businesses are not static, and what may have worked for you when you first got started may not work for you any more. Regardless of why that is, a business reorganization may be something that can help. However, to manage this process, it is best to consult a lawyer with experience handling business law matters.
If you have a business law issue, give the Law Office of Andrew Ross Sack a call. Andrew Ross Sack is a New York and New Jersey business lawyer who has considerable experience in handling the many aspects of business law. To schedule a consultation with New York City/Long Island/Westchester business lawyer Andrew Ross Sack, call (516) 526-3319 or visit his contact page.
