Starting your own business can be a rewarding decision. Millions of Americans own and run their own small businesses, and these small businesses can provide stability and security to your family and your community for years to come. Of all the decisions you need to make at the time your start your business, one of the most important is the type of business structure you intend to choose. There are several different choices, and each has its own benefits and draw backs.
The most simple business structure is a sole proprietorship. As the name suggests, a sole proprietorship means that you will be the only owner of the business. One big benefit is that you will also be the only one in control of the business and its affairs. Another benefit is there are not many requirements concerning regulations. One big downfall, however, is that it provides no insulation of your personal assets. You, personally and as the business owner, are responsible for the debts and liabilities of the business.
Limited Liability Partnerships or Limited Partnerships are another choice. In limited partnerships, there will be at least one general partner and one limited partner. The general partner or partners have the right to control and make decisions about the business. The limited partner may still receive financial benefits from the business. These arrangements are often very popular for family businesses when the intention is that the children will benefit from the business and maybe one day take over the business. These also provide distinct tax benefits as well as insulating the personal assets of the partners if the business is sued.
Corporations can be another proper choice for forming a business. In a corporation, one or more shareholders are the ones who own the business. Like a partnership, the shareholders are typically insulated from liability for the business’s debt or lawsuits. There are many different types of corporations, including S-corporations, C-corporations, and closely held corporations, but each has its own restrictions on how income is distributed and how the expenses are required to be reported to shareholders and the state.
We have extensive experience with helping our clients navigate business law and deciding how to organize their business. Call us today and we can help you get started