Congratulations! You’ve decided to start a business! Now that you have an amazing service, product, or idea, your next step is to determine which type of legal business structure will be best for you both legally and financially. This is an important decision and can affect multiple aspects of your company. Learning what types of business structures exist can help you make a better decision.
How a Business Structure Impacts Your Business
Your business structure will most importantly affect how you pay taxes, but will also affect several other areas of your day-to-day operations. Deciding on a business structure will determine if you are personally liable, how much and how often you file certain paperwork, and how you are allowed to operate in your state.
Before you make the decision to register your business, obtain your tax ID number, and fill out all the paperwork, you need to make a decision on which business structure is right for you.
Business Structure Options
The most common business structures options available are as follows:
- Sole Proprietorship – This business structure is simple, however, you will remain personally liable for any debts of the business. This structure is common among start-up and smaller companies.
- Partnership – This is the simplest business structure that can be created between two people. The two options will be a limited partnership or a limited liability partnership.
- Limited Liability Company – This business structure is simple to adopt as well, and provides a bit more protection regarding personal liability. Ultimately, these business owners are legally defined as self-employed.
- C Corporation – This is a more complicated business structure to create, however, it does insulate the owners from personal liability. Due to the more complicated nature to legally establish a C Corporation, it can cost more to set up than other business structures. With more reporting requirements and the ability to issue corporate stock, this type of business structure really is for larger businesses.
- S Corporation – This business structure requires that you file with the INternal REvenue Service, and while it avoids some of the taxation involved with a C Corporation, the tax structure can be a bit complicated and challenging to understand.
This list of business structures is not exhaustive, and as you may be able to tell, deciding on a business structure is a complicated process involving complex and ever-changing business laws.
Let Us Help You Today
Deciding to start a business is an exciting time, filled with a lot of decisions. One of the most important decisions you will make will be how to establish and create your business structure. Contacting an experienced business law attorney can help you understand your legal rights, protect your assets, and establish a foundation for a successful business.
At the office of Julianne Frank, one of our experienced Jupiter business attorneys would be happy to visit with you regarding your new business, and which type of business structure would be right for you. If you are interested in learning more about what options are available, please contact us at (561) 220-2528 today.