Taking the entrepreneurial leap to start a business is challenging, scary, and certainly not for the faint of heart. While being your own boss is incredibly rewarding at times, it also carries a number of additional pressures for the business owner. If you have decided that you are ready to push forward and start a business of your own, there are a number of things that need to be accomplished. One of the first steps of deciding to start a business is determining the right structure for your future company. Making this decision correctly is far more important than many think, as your business structure lays the foundation for how your company will operate and function for years to come.
As with anything of critical importance, speaking to an experienced professional for guidance will ensure that your business formation is handled with efficiency and effectiveness at its heart. The following is a brief overview of the most common business structures seen today:
- Sole Proprietorship: this is the simplest type of business, as a sole proprietorship is not a legal entity and only refers to a person who individually owns a business and is responsible for the debt of that business.
- General Partnership: a business is considered a general partnership when there is more than one owner but no paperwork has been filed with the state. It is advisable, however, to create a partnership agreement in order to structure the relationship in some way.
- Limited Partnership: this is similar to a general partnership, however, in this business structure there must be at least one limited partner and one general partner.
- Limited Liability Company (LLC): often looked at as a mix of a corporation and a partnership, this business structure grants protection from any personal liability, as the business debts and liabilities are the company’s.
- Limited Liability Partnership (LLC): a partnership where one partner is not liable for any of the other partner’s negligence or misconduct. An LLP is also a mix of a partnership and a corporation.
- “C” Corporation: this business entity’s profits are taxed separately from its owners and offer maximum growth potential via the sale of stocks.
- “S” Corporation: the shareholders receive this business corporation’s profits, losses, deductions, and credits and therefore they are taxed on personal returns
No matter what type of business structure you choose, seeking reliable, experienced, and professional legal guidance is paramount to starting your business in the proper way. With a myriad of decisions to make and options to consider, we strongly recommend that you contact The Law Office of Brenda Murzyn, P.C. and start your business on the right foot!
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