You want to go into business for yourself. You have developed a business plan, secured the necessary funds and are ready to invest in formation and get your business off the ground. The first thing you need to do is decide how your business will be organized. There are many different types of structures available depending upon the size and nature of your business. The main factors to consider are ownership, taxes and personal liability.
You must consider ownership when choosing a business form. If you are going to own the business yourself, or with a limited number of other individuals, a sole proprietorship or partnership might be a good fit. These types of businesses are usually fairly easy and inexpensive to start and maintain. If your business will be owned by more than a few and/or an indefinite number of individuals, a corporation or limited liability company might be right for you. Corporations and LLC’s, depending on their structure, allow for a business to have many owners. These types of businesses are subject to more technical requirements than their counterparts to become established, but they are a good choice for many entrepreneurs.
We all have to pay taxes on our income and the same rules apply to businesses. The business form you choose has an effect on the taxes that you pay. For example, corporations and LLC’s are usually eligible for more tax benefits than sole proprietorships and partnerships. When it comes to corporations, the tax treatment depends upon the type (S or C corporation).
Individuals are held responsible for the liabilities of their businesses on a regular basis. Some business forms can prevent your personal assets from being factored into the equation. Corporations and LLC’s shield business owners from being personally responsible for business liabilities in most situations. Sole proprietorships and partnerships do not offer this protection, so if you are likely to be involved in litigation or are taking considerable business loans, you might want to think twice before using these business forms.
It is essential at this point to think about where your business is starting and where you see it going. Do not worry, if you need to change the business structure to suit your needs in the future, it can be done. If you are considering starting your own business and need advice as to the structure, call Austin, Texas business formation attorney Sanjeev Kumar at (512)323-6060 for a consultation today.