Launching a new business is an exciting time! But before you get lost in daydreams about success, there are some important decisions to make. One of those decisions is choosing the right business structure for your company. It’s not as boring as it sounds – just think of it like picking out your perfect outfit for that all-important first meeting with a potential investor. After all, you wouldn’t show up in pajama pants!
The Different Types of Business Structures
When it comes to picking out the right ‘outfit’ for your startup, there are four main types of business structures to choose from: sole proprietorships, partnerships, corporations and limited liability companies (LLCs). Each type has its own advantages and drawbacks. Let’s take a closer look at each one.
Sole Proprietorship: This is the simplest form of business structure – basically just you, doing business on your own. You have complete control over how you run things but at the same time, you also bear unlimited legal liability for any debts or other obligations incurred by your company.
Partnership: If you plan on going into business with another person or persons, then a partnership might be the way to go. Just like sole proprietorships, partnerships don’t require much paperwork but they can increase legal liability if things go wrong. Plus, if there’s a disagreement between partners then it can lead to costly and time consuming litigation down the line.
Corporation: A corporation is an independent legal entity owned by shareholders who have limited liability for any debts or other obligations incurred by their company. Corporations also provide certain tax benefits and offer more flexibility when it comes to raising capital. The downside? They require more paperwork than other types of businesses and can be expensive to set up and maintain.
- Limited Liability Company (LLC): An LLC combines features from both corporations and partnerships – owners have limited personal liability but still enjoy certain tax benefits such as pass-through taxation (meaning profits flow directly through to owners). As with corporations, LLCs require more paperwork than sole proprietorships or partnerships but less than corporations do – plus they’re relatively easy to set up without too much hassle or expense.
Get to the Point: When setting up a new business you need to consider which type of structure best suits your needs and goals – so take some time to research each option carefully before making any final decisions! And remember that even after you decide on one type of structure now, you can always switch later if needed; after all, clothes shopping doesn't stop once you find that perfect outfit! With these tips in mind, finding the right business structure should be no sweat at all!
Contact Edmonds Law Office at 678-404-1239 to discuss your business structure needs.