A Guide on Choosing the Best Business Structure for Your Company
It is very easy for you to find yourself confused especially in the world of business and finance. If you’re adjusting the process of starting out, you’ll realize that there are very many things that can be challenging. According to statistics today, very many businesses are started every year. When you look at the statistics specifically, you’ll notice that you have more than a million businesses as startups. One of the things that is considered to be very consequential is the kind of business structure you’re going to choose. You’ll realize that your business is going to be influenced a lot by this especially in the future or as you continue growing.
Knowing the differences between the different types of business structures will be a very good place to start. It is important for you to make sure that you have understood the advantages and disadvantages. It will be possible for you to choose the best position for your company and you have this kind of understanding. It is possible for you to simplify this although it may seem to be a very easy position. With business structures, there are few options to choose from. The first option that you have available is the partnership . The partnership business is basically going to involve some people starting the business together and after that, running the business and sharing the profits.
These partners however are also going to share their liabilities. Depending on how the partners are going to agree on the sharing of profits and liabilities, you have a very simple structure, you will quickly realize that most of the time it is done equally. When it comes to the filing of taxes, every partner is supposed to follow up on their profits and losses and do the necessary filing with the IRS. If you have a group of like-minded visuals that have the same idea or you share the vision, this type of business structure can be quite good for you. The other option you have available will be to consider the sole proprietorship business structure. Basically, this is a business where a person starts a business on their own and they will be the owner and operator. There will be no separation of liability between the owners and they business, they are the same entity.
You have this kind of business structure in many of the businesses in the USA, above 73%. There is also the problem of the limits associated with the sole proprietorship . The limited liability company is the other option where you get to form a company, there are many advantages of an LLC. This is going to have separation of liability between the owners of the business and the business.