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There are many important decisions to make as you are starting a business. One of the biggest is what structure the business should have. If this is something that you have never put much thought into before, then it is worth learning more about it. The thing is, the structure that you choose for your business makes a considerable difference to how that business actually operates, and there are many subtleties which are well worth considering. To that end, let’s take a look at a few of the most popular business structures, and see how they compare to one another.
There is no doubt that this first one is the most basic type of business you can have. A sole proprietorship is an unincorporated business owned and run by an individual - you - with no distinction between that individual and the business itself. An obvious downside of this approach is that you are personally more liable should anything go wrong. If anyone ever wants to sue the business, for example, then they are suing you personally too, whereas with other business types you would be more protected. But people use the sole proprietorship structure for a good reason, and one major benefit is that you have complete control over it. It is also inexpensive to form, and easy enough that most people can do it without any trouble.
For larger businesses with grander ambitions, the sole proprietorship structure may not do the job. A more complex option is the corporation, which is an independent entity owned by shareholders. As a result of this layout, the corporation itself is legally responsible for itself, not the people who own it. This is a clear advantage, as it means that there is limited liability for the individual should anything go wrong. It is also one of the best structures in terms of tax paying, and that is definitely worth bearing in mind. Turning a business into a corporation is a relatively straightforward process, especially with companies like www.CorporateDirect.com around to give you a hand.
Limited Liability Company
One of the great things about there being so many structures to choose from is that there really is something for every purpose. A limited liability company (LLC) is a good example of how this is achieved. An LLC is a hybrid type of structure which combines the limited liability benefits of a corporation (which we have already discussed) with the tax benefits of a partnership. An LLC is a good option if you want more control over a corporation-like business, as it gives you the best of both worlds. A keen disadvantage of this type, however, is that it tends to have a relatively limited life. Still, it can often be a useful choice if you want to have your cake and eat it. Another downfall to bear in mind is that the owners of an LLC are considered self-employed, so you will need to arrange your own taxes. More on this structure can be found at https://www.sba.gov/starting-business/choose-your-business-structure/limited-liability-company.
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