helps people win back their lives
Choosing a Medical Marijuana Business Structure
If you have determined that starting a business is right for you, the next thing to consider is the business structure you want to utilize. Understanding the various business structures available to you can help you choose the right one. The main business structure choices to consider are a sole proprietor, a corporation, a partnership, or an LLC. When choosing a medical marijuana business structure in Michigan, you should consider investment needs, income taxes, liabilities and risks of your business, and the expenses and formalities involved in that structure. Contact a distinguished medical marijuana lawyer today to begin planning your organization.Sole Proprietorship
Choosing a medical marijuana business structure in Michigan in the form of a sole proprietorship can lead to many benefits. This is a common form of small business that has one owner. This is the default for a small business because it does not require any paperwork to set up. If someone is interested in a sole proprietorship but do not want to use their personal name, they can apply for a sole proprietorship doing business as (DBA). Individuals can obtain a certificate for this form of proprietorship from a county clerk.Difficulties of Managing a Sole Proprietorship
In a sole proprietorship or sole proprietorship DBA, no legal separation exists between an owner of the business and the business itself. This means that the individual can take on the full responsibility of the debts and liabilities involved with the business. If they cannot pay, a vendor can sue them individually, leaving them with little protection. In addition, losses and income from the business are listed on a personal tax return.Benefits of Registering as a Sole Proprietorship
A few advantages of the sole proprietorship are that they are easy to set up and they are inexpensive. In addition, profits are taxed once at the owner's rate. When deciding a medical marijuana business structure in Michigan, one should consider the disadvantages. In this business structure, persons have unlimited liability for the business' debts. One person can be the established owner of the business.The Role of a Corporation
If someone wants to establish a business that is separate from them, they should consider creating a corporation. Corporations are legal entities that are separate from any of their members or owners. The business itself has its own liabilities, privileges, and rights. Owners of the business, including stockholders and shareholders, do not take on the business' debts as their personal responsibility. Corporations can have one owner or multiple owners. Generally, shareholders of the corporation elect a Board of Directors. This board makes major decisions and oversees policies. They also hire employees to maintain the business from day to day. The corporation itself can sue and be sued, own property, and enter into contracts.
When choosing a medical marijuana business structure in Michigan, it is important to know that a corporation is the most complex and expensive to establish. Individuals need to file Articles of Incorporation with the LARA and pay the application fees. There is also an annual fee that needs to go to LARA.What do Corporations Require?
Corporations also need to comply with many different formalities to stay in business, so running them can be a complex process. Also consider that corporations pay taxes at special rates, so they are subject to double taxation. This can be avoided by applying for the subchapter S corporation, but not all corporations are eligible for this. Overall, some advantages of starting a corporation include the ease of transferring ownership and the ease of raising capital through stock. In addition, you might be able to get a subchapter S with the IRS. Finally, there is limited liability for the business' debts, which protects shareholders.
It is also important to consider the disadvantages before choosing a medical marijuana business structure in Michigan. Corporations can be expensive to set up and maintain. Also, it can be difficult to maintain corporations, as there are a lot of regulations to follow. Corporations are also closely regulated by the government. If your corporation is not eligible for subchapter S, it can be subject to double taxation.
If you wish to learn more about choosing a medical marijuana business structure in Michigan, consider reaching out to a professional narcotics attorney today for guidance.