Starting a new business comes with all sorts of decisions to make that can have a huge impact on the future success of your enterprise. One of the most impactful decision you will have to make is the type of business structure under which you will register your company with the Secretary of State. Evaluating the pros and cons of each structure can help you to decide which one is the most beneficial for your particular circumstances. Following are just a few of the structures available to you.
Partnerships
If you wish to start a business with one or more other people, and if you prefer a simple startup process, a partnership might appeal to you. There are several types of partnerships, each with their own characteristics.
For example, limited liability partnerships grant you a certain measure of protection from liability for the debts and obligations of the partnership, unlike a traditional partnership. There are also types of partnerships, such as limited partnerships, in which not all partners have equal decision-making power or degrees of liability.
Corporations
Unlike a partnership or a sole proprietorship, a corporation is a separate legal entity. In other words, if your business is a corporation, it will have its own funds, pay its own taxes, incur its own debts, and so forth, completely separately from your own personal finances.
Corporations have the added benefit of being able to raise large amounts of capital quickly by selling shares or issuing bonds. There are also various ways to structure a corporation in order to maximize tax advantages.
LLCs
LLC stands for Limited Liability Company. As the name suggests, an LLC is similar to a corporation, but grants a greater degree of personal protection from liability for its members. If you are worried about getting sued or incurring debt, an LLC may be a good option for your business – even if you have no partners or investors and you will be the sole member.
Although your business structure is an extremely important decision to make, it is not permanent. If, as your business grows, you decide that a different structure would be more beneficial in the long run, you can always go through the process of converting your business to a different structure in order to take advantage of tax laws and other elements.