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What form should your business take?

The excitement of turning your dream of a business into a reality is tremendous. You are your own boss, and you get to make all of the decisions, large and small. At times, during the start of phase of a business, the sheer number of decisions may seem overwhelming.

If this is your first time in a new business opportunity, even you have a great deal of practical experience in the same line of business, creating your own entity from scratch is different. While you may understand how to furnish the rooms, you also need to create the superstructure of your building in the first place.

 

There are many ways to organize your business, and your choice, whether a simple sole proprietorship or a complex partnership or limited liability company structure, you should spend some time with a business formation attorney discussing the various types and determine which type will best fit your business.

If limiting personal liability is important, a sole proprietorship, where all of your personal assets could be exposed, may not be the best choice. If you are working with a group of individuals, determining if a partnership, LLC, S corporation or a traditional corporation is best can be a very complex equation.

Your choice of form may also influence your management structure, and the creation of your articles of incorporation, bylaws, member agreements or shareholder agreements will be vital.

These documents will govern how decision are made, who is permitted to make them, and the procedures necessary to amend or change any of these documents. The advantage of having this all done prior to the actual startup of your business is that it sets clear expectations and prevents hard feelings that can fester into debilitating disputes and cripple your business before has a chance to succeed.

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