What’s the right business structure for you?

Of all the choices you make when starting a business, one of the most important is the type of legal structure you select for your company. Not only will this decision have an impact on how much you pay in taxes, but it will also affect the amount of paperwork your business is required to do, the personal liability you face and your ability to raise money.

Start It Up Mentoring would love to educate you more on what may fit your business perspectives, expectations, and goals.

Types of Business Entities:

The type of business entity you choose will depend on three primary factors: liability, taxation and record-keeping.

Here's a quick look at the differences between the most common forms of business entities:

A sole proprietorship is the most common form of business where a person can start alone. This offers complete managerial control to the owner but at the same time, the owner is also liable for all kinds of obligations of the business.

A partnership involved two or more people and this can be the next closest ideal business structure to do. A primary advantage is that the partnership does not bear the tax burden of profits or the benefit of losses-profits or losses are "passed through" to partners to report on their individual income tax returns.

A corporation is a legal entity that is created to conduct business. The corporation becomes an entity separate from those who founded it as it handles the responsibilities of the organization.

Limited Liability Company (LLC) is gaining in popularity because it allows owners to take advantage of the benefits of both the corporation and partnership forms of business. Losses and profits can be passed on to the owners without taxation and shielded from personal liabilities.

Knowing the basics of different business structures, what do you think suits you best?