If you're opening a business, one of the most important things you can do is to pick the right business structure. You want to protect yourself and have the right set up to raise money for your business. The kind of business you register as also affects how much you'll have to pay in taxes and the amount of documentation you'll need to complete annually.
There are several kinds of business structures to consider. Review each before you make a decision that could affect the future of your business.
If you are working with two or more people, a partnership may be for you. Each partner is personally held liable for the finances of the business, which is something to keep in mind.
Sole proprietorships are among the most common businesses. The owner becomes personally liable for the business's fundings and financial obligations, though, which could impact the owner negatively.
Limited Liability Company (LLC)
This is a kind of partnership that is growing in popularity because of the fact that profits and losses may be shared among the owners on their taxes. Additionally, the owners are protected against personal liability if something goes wrong with the business.
This is usually a format used for larger companies. The corporation becomes its own entity and can be taxed and held liable for its actions.
When you're ready to create your business, it's worth learning as much as possible about each of these options. Choosing correctly helps shield you against liability. Our site has more on what to consider when starting your business.