How do I know what type of business to form?

UPDATED: Oct 1, 2022

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How do I know what type of business to form?

I am a LMT looking to rent a shared room in a doctor’s office. I would like to be a sole proprietor or LLC business. Is this possible to do without being involved in a partnership with the roommate renter? We however, would like to market together on a website, but do separate services, payments and business cards. Would I be liable for this other LMT if she is on the lease? Would she technically

work for herself still if she advertises that she is

Asked on January 3, 2018 under Business Law, South Carolina


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 5 years ago | Contributor

1) An LLC is much more advantageous, since it (as the term "limited liability company" implies) provides considerable protection against business-related debts, liability, and obligations. While the protection is not perfect (no protection is), it will insulate your personal assets (e.g. house; car; money in the bank) from most amounts the business might be required to pay. (Note: the main type of debts, etc. you will still be liable for are any that you personally guaranty for the LLC.) A sole proprietorship provides *no* liabilty protection.
2) You can have separate businesses and provide services, billing, etc. separately while co-marketing.
3) Leasing (e.g subleasing) from the other LMT, or leasing (or subleasing) to her does not make either of you liable for the other (except in regards to the rental, until the terms of any lease(s)).
4) If she has a role at or authority over your business--whether an actual role or just the reasonable appearance of one (e.g. she is "So So" at your company)--she could make the company liable, such as for any agreements she enters into, or potentially for any harm or injuries she causes which arise out of her role with you. You would be essentially making her an employee, at least to the outside world,  by making her a "So So" at your business, and so she could make the business liable or responsible for certain things, the way any employee could. (Though if you form an LLC, you personally would not be liable.)

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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