In the start-up or sale of a business, what does “the choice of entity” mean and what factors should I consider with my attorney?

“The choice of entity” is what lawyers label the decision regarding the which kind of business type. Determining “the choice of entity” is when you make the choice to set-up your business as a separate legal entity or person. At Lawrence B. Morse & Associates, we advise clients about which choice is best for your situation. While the choice is often simple, it can also become quite complicated.

The primary options for “the choice of entity” and their liability status include:

  • Sole Proprietorship–a single individual – unlimited personal liability
  • Partnership—two or more people join together in business, generally unlimited personal liability
  • Corporation—business incorporated as one or more people or entities, protection against personal liability
  • Limited Liability Company— one or more people or entities set up as a “ LLC,” a relatively new form of business combining the benefits of a corporation and a partnership, including protection against personal liability.

Other less common options for “the choice of entity” include hybrids. We work with you to consider all important factors concerning the decision, such as your specific business goals, the industry, the risks of being sued not covered by insurance, tax issues, and the costs of setting up and maintaining an entity. Sometimes one entity needs to be converted to another under new circumstances.

A person starting a business alone is a sole proprietor and no specific filing is required in regards to this entity choice. However, choosing to be a sole proprietor or entering into a partnership comes with the risk of personal liability and having all or most of one’s personal assets at risk if sued. There are exceptions and they need to be reviewed.


Follow Us


Lawrence B. Morse & Associates is located north of Boston in Danvers Massachusetts and specializes in employment and business law and business litigation for Massachusetts businesses and employees.

Feel free to contact us and we'll be in touch shortly.

Address: 19 Cherry Street, Danvers, MA 01923

Telephone: 978.777.1176

Please submit the form below:

Your Name (required)

Your Email (required)


Your Message

Copyright © 2010- 2016
Lawrence B. Morse & Associates, Attorneys At Law, LLC. All Rights Reserved.

Lawrence B. Morse & Associates is located on the North Shore in Danvers, Massachusetts and specializes in business law,
employment law and litagation for business owners and employees in Essex, Middlesex, and Suffolk counties.

The materials in this advisory should not be relied upon in making decisions about your personal situation.
Competent professional advice concerning your individual situation is essential.