Choosing a business form is an important process, which is why new business owners should be aware that legal resources can help ensure they get started off on the right foot. The type of business form selected can have an impact on your business for years to come, which is why it is essential to be familiar with the different business forms available and what your selection means for you and your business.
When starting a business, it is important to take into account that the type of business form selected will have an impact on concerns like taxation, liability, control, paperwork and costs of running the business, raising capital and ending the business. A sole proprietorship is the simplest business form and provides the most control for the business owner, but also includes the most exposure in terms of personal liability.
A partnership is another business type that, like most, provides advantages and some possible disadvantages, as it provides “pass through” taxation, but also does not protect partners from personal liability. A corporation provides protection from personal liability, but is oftentimes considered double-taxed because the corporation pays taxes as do the owners and shareholders of the company. It can also be costly and complex to run. A limited liability company is sometimes described as the best of both worlds, as it provides personal liability protection as well as pass through taxation.
Whatever business form is selected, if you are the business owner you should make sure that it accommodates the present and future needs of the business so that it can grow and develop on its path to success. Entrepreneurs and new business owners should be familiar with the legal resources available to them to help them choose the best business form.