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    Opening a business is a big decision – one which many people dream about their entire lives. In fact, as of 2020, there were more than 31.7 million small businesses in the country. That’s a lot of competition. So, it stands to reason that you would want everything to be just right. You need the right name, the right logo, and the right clientele. However, before setting up a brand, owners must establish which legal business structure will best serve their type of business. This decision requires some forethought and research to ensure your business lasts for years to come. 

    Sole Proprietorship 

    If you prefer to be the only boss in your business and want a structure that requires a little less effort to start up, a sole proprietorship may be for you. Business owners who operate their business without registering are typically considered sole proprietorships. This helps makes startup fast, easy, and cheap (or free if you avoid registering).  

    Sole proprietorships aren’t without their thorns, though. In this business structure, government agencies like the Internal Revenue Service (IRS) consider you as the owner and the business itself as one entity. In other words, you are your business and there is no distinction between your personal and professional assets. Therefore, you’re on the hook for all your business’s expenses, debts, and loans even if the business fails. 


    Like the name implies, a partnership is a structure in which two or more people own the business. With a business partner, you could have double the assets to start the business and double the ideas to keep the train going. Like a sole proprietorship, this business structure requires less effort the register and is ideal for more informal businesses. 

    There are two types of partnerships: a limited partnership and a limited liability partnership. In the case of limited partnerships, one partner retains more control of the business in exchange for more liability for the business’s debts. Meanwhile, in limited liability partnerships, all partners are protected from business debts in the event it fails. 

    Limited Liability Company (LLC) 

    Limited Liability Companies (LLCs) are a popular structure option for business owners. This type of business establishes a company as a separate yet connected entity from the owners and operators, allowing them to protect their personal assets like their car or home from business debts. 

    Owners who leave or enter the business, though, may need to close the LLC and re-open a new one with updated ownership. Additionally, owners of an LLC must still pay self-employment taxes as they would if they were sole proprietors or part of a partnership. 


    Corporations are the most strictly regulated business structure. When a business owner or shareholder establishes a corporation, the government recognizes the company as an entirely separate legal entity from the operators. Because of this, a shareholder’s personal assets are strongly protected from the corporation’s potential bankruptcy, debts, or lawsuits. As its own legal entity, a corporation’s profits, expenses, and taxes are handling within the company. Revenue is not attributed to the shareholders, but rather to the business itself. This also means that ownership or shareholder comings and goings can occur without disruption to the business’s normal operations, unlike an LLC. 

    Corporations offer many benefits, but this comes at a higher price tag. Establishing a corporation structure can be costlier than other types of business. Additionally, as legal entities, corporations must meet several standards of record-keeping and operation. This may include bylaws, resolutions, and Articles of Incorporation.  

    Build Your Business in the Inland Empire 

    Starting your business can be exciting and overwhelming, no matter which type of business structure you choose. While you likely just want to skip to making money, there’s paperwork to complete beforehand to make everything official. Don’t worry! This doesn’t have to slow you down. With help from ProSe Legal’s team of experienced legal document assistants (LDAs), you can wrap up the complicated paperwork faster and start running your business. ProSe Legal is the Inland Empire’s local one-stop shop for business formation document assistance. From Articles of Incorporation to records of Dissolution, we’re here to assist you throughout your business ownership journey from any of our local offices. We can also come to you in our mobile office!   today or call (909) 497-1349 to schedule your appointment.