Whether you are starting your business from the ground up or your business is growing, understanding the structure of your business is crucial. However, choosing the right business structure can become challenging as each structure comes with their own pros and cons. The choice of your business structure will determine your tax rates, management and paperwork requirements, and more. Before you officially open those doors, you should understand and choose a business structure that aligns with your goals. Deciding on the best business structure can be daunting, but with the right information, it can become a straightforward choice.
Choosing the Right Business Structure
Before you choose your business structure, you will want to consider a balance between legal protection and benefits. The business structure chosen will affect tax filing, protection of your assets, amount of paperwork needed, and other aspects of getting your company off the ground. There are a handful of structures to choose from, all with their own benefits and drawbacks. Among the most common are:
- Sole Proprietorship
- Limited Liability Company (LLC)
- Corporation
A Sole Proprietorship structure is the easiest to form and gives you complete control over your business. However, your personal assets can be at risk if you owe any debts or the business is at risk. A Limited Liability Company (LLC) is a hybrid structure that allows owners, partners, or shareholders to limit their personal liabilities. LLCs have a limited lifespan in most states, so check your states limitations before filing for an LLC. Lastly, a Corporation is regarded as a separate entity from its owners by law. This structure often serves business owners who are further along in their growth, rather than a start-up. There are numerous document and filing requirements for corporations, so research is key.
Factors to Consider Before Making the Choice
Its not easy to decide which business structure will align with your goals in both the short- and long-term. Before you make your decision, consider your financial needs, risk tolerance, and ability to grow. It can be challenging and lengthy to change your business structure after registering your business, so give it careful consideration. Liability, taxes, control of the business, license, permits, and regulations can all vary depending on the business structure you select. With a little research and preparation, you can ensure that the business structure you choose is the best fit for you and your goals.
Let ProSe Legal Service Guide Your Business
Starting a business is not an easy task. The mountains of paperwork required to open the doors can certainly feel overwhelming. And it may not always be clear where and how you should file your business documents. At ProSe Legal Service, our professional LDAs have helped our entrepreneurial neighbors open their businesses for years! Allowing them to get right to the best part of owning their business. Once you have chosen your business structure, let us help you with the pesky paperwork and filing! We can help you get started as soon as possible.
If you have any questions about preparing business structure paperwork, contact us today or call (909) 224-4361 to schedule your next appointment with our team of professional LDAs!
