What Type of Business Entity Should You Choose

Starting a business in Michigan comes with its fair share of pivotal decisions. Among the most consequential is the type of business entity you opt for. This choice can profoundly impact your venture’s legal, financial, and operational dimensions. At Just Right Law, we pride ourselves on delivering tailored legal solutions that empower our clients to make informed choices​.

Sole Proprietorships

Sole Proprietorships are the most straightforward entities to establish. They require no formal registration, and you can operate under your own name or a DBA. The primary advantage is the ease of starting up and having direct control over business affairs. However, the downside is the unlimited personal liability you bear, coupled with limited avenues for fundraising.


Partnerships, on the other hand, are arrangements between two or more individuals. While some partnerships might necessitate state registration, the essence lies in the mutual agreement. The combined skillsets and resources can be a boon, facilitating shared responsibilities. That said, partners need to be wary of the fact that they could be personally liable for all of the partnership’s debts and the potential for internal disputes.


LLCs (Limited Liability Companies) strike a balance between simplicity and formality. To set up an LLC, one must file articles of organization with the state. In addition, you should draft an operating agreement, but there is no requirement to do so or register it with the state. The primary benefit of an LLC is that you will be protected from personal liability for business debts – provided you follow certain formalities. Liability protection is a significant draw, along with management flexibility and possible tax benefits. However, they come with their own set of challenges, including more paperwork than sole proprietorships and potential self-employment taxes.


Lastly, Corporations are more complex entities, requiring founders to file Articles of Incorporation, establish bylaws, and appoint directors. They are favored for their limited liability provisions, the ease of raising capital, and the potential for an enduring existence. But they also have their downsides, like the risk of double taxation and a higher regulatory burden.

Call Us Today to Schedule a Free Case Evaluation with a Michigan Business Lawyer

The business entity you choose should align with your vision, risk appetite, and financial considerations. At Just Right Law, our commitment is to ensure your business’s foundational decisions are made with clarity and conviction, rooted in open, honest, and frank communication. To schedule a consultation with a business lawyer in Michigan, call our office today at (248) 519-2313 or contact us online.