There are a lot of decisions to make as you start your business. You’ll need to secure a location and talent, develop a marketing strategy, and negotiate contracts so that you have a strong supply line and a reliable customer base.
Yet, before you even get to those decisions, you’ll have to address another issue: your business structure. It may seem like a minor point, but the truth of the matter is that the structure that you choose for your business can have a tremendous impact on business operations and your personal risk.
What are your business structure options?
As you’re starting your business, you’re going to have a lot of structure options at your fingertips. And it can be challenging to dig through the nuances of each structure type. That’s why we hope this blog post will be helpful to you, as we’ll briefly look at some of the most common business structure types. Just remember, though, that you should speak to an attorney if you have questions about which structure type is right for you.
- Sole proprietorship: This type of business is easy to start, as there aren’t many, if any, requirements that have to be met. A sole proprietorship can also give you full control over your business operations, which many people prefer. The biggest drawback here, though, is that you’re liable for your business’s debts and other liabilities. That means that by selecting this structure option, you’re putting yourself at a great level of personal risk.
- Partnership: This is a popular option. Here, you go into business with one or more individuals, and the obligations of each partner are spelled out in the partnership The partnership agreement also dictates how profits will be shared.You can still retain a significant amount of control with this business type, but you might still be personally liable for the partnership’s liabilities. However, another reason why partnerships are popular is that income is only taxed at the personal level and not the business level, which means that profits avoid the double taxation that corporations see. There are ways to limit your personal risk in a partnership, so be sure to discuss that with your attorney.
- Corporation: This type of business, unlike the others mentioned above, is distinctly separate from its creators. Therefore, a corporation is sort of like a person in and of itself. The corporation can enter contracts and take out loans, which, in many instances, allows the business’s creators to avoid a lot of liability for the business’s debts.Corporations are required to file articles of incorporation, and many create bylaws that specify how the company is to be run. Corporations also tend to be in a better position to raise capital, as they oftentimes issue stock. Just remember, though, that a corporation is going to require more recordkeeping and will face additional taxation.
Do you need guidance while forming your business?
If you’re starting a business, then you have a lot to think about. With so much on the table, it can be easy to overlook something or rush through a decision so that you can keep the process moving along and meet any deadlines that you’ve laid out for yourself. But if you want to protect your interest and create the business that is right for you, then you need to be diligent and properly address every issue before you.
We know that can be time-consuming and overwhelming, but it’s not something that you have to struggles through on your own. Law firms like ours are here to help you navigate the business startup process so that you begin your new endeavor on solid ground. If you think that you could benefit from that kind of guidance and advice, then please continue to read our website to learn more about what we have to offer our clients.