If you are thinking about opening a business, it’s important to consider which type of structure might be the best fit for you.
Business entity choices
There are four general business structures, called a sole proprietorship, a partnership, a limited liability company (LLC), and a corporation.
A sole proprietorship is usually simple to set up and there are few formalities involved. It means you run the business on your own and you also have personal liability for the business. With a partnership, you share the ownership with another person. You share the business profits and liabilities.
An LLC offers limited liability for its members and may be a more flexible option than a corporation. A corporation may have shareholders and the potential to issue stock, which can help raise capital for the business.
Ultimately, the business structure you choose should depend on your goals, the size of your business and whether you want to partner with others.
Process
After you decide what type of business entity you want to form, you will want to check whether your chosen business name is available to use through a business name search. Then, you will need to file the formation documents and obtain a tax identification number.
It’s also important to determine whether you will need to apply for licenses or permits and ensure that you meet any continuing compliance requirements. These can include paying local, state and federal taxes and filing any necessary annual reports.
Meeting these requirements will help support your business’ long-term success.
