The business structure you choose for your company has a big impact on many things, including your personal life.
Here are a few of your options to consider.
No special paperwork is necessary to establish this structure. There's only one owner and it's a good option for testing a low-risk business idea before moving to another business structure.
Two or more owners can choose from a limited partnership or a limited liability partnership. This is a good option for professional groups because it can transition to another structure if necessary. Personal liability is also not on owners.
Limited liability company
This model provides protection from personal liabilities of the business. There are no corporate taxes, making it ideal for medium-risk and high-risk companies.
Personal liability is separate from company liability. The company can eventually go public or be sold. Raising money is a simplified process in this model and multiple types of corporations are available.
Owners benefit from the distribution of services and receive profits or earnings. Owners can also vote on the direction of the cooperative. A board of directors runs the regular business.
Weighing out your options
When weighing out these options, keep the goal you have for your company in mind. There are many benefits to these business structures, but some may fit your personal circumstances more closely.
A consideration for many people starting a business is separating their personal assets from the company assets. You can't make this happen with a sole proprietorship, but other forms do offer this protection if they are established correctly.
The cost of establishing and maintaining the company's structure is also an important factor. Typically, corporations cost the most, but this might be the best option if you think your company is going to grow fast or to a considerable size. Sole proprietorships usually don't have a cost to establish but check your local codes to find out if there are any special forms you need to file in your area.
Get a second opinion
Working with a team of professionals that is well-versed in these matters can help you to determine exactly how each structure will impact every facet of your new company. Speak to a business attorney for a second opinion on which model might be best for you.