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What Type of Business Structure or Entity Should I Choose?

 
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4.5/5 stars (2 votes)
Category : > New Business Setup
Posted On : Mon Sep 05th,2011

 
How can I determine the best business structure for my business?
 

 

 

Write a Business Plan

The first step in making a decision to start a business is to write a business plan. Whether big or small every business should have a written business plan before moving forward. If you have never written a business plan before there are resources that can assist you.

 

What Type of Business Should I Choose?

There are different business structures/Entitites you can choose when starting your first business. You should have a good understanding of the pros and cons of each type. It is strongly recommended that if you are unsure of which structure is best for your business you should seek professional advice from an attorney or accountant.

Sole Proprietorship

  • Advantages
    • Low start-up costs
    • Greatest control by owner
    • Minimum working capital requirements
    • Tax advantage to small owner
    • All profits to owner
  • Disadvantages
    • Unlimited personal liability
    • Lack of continuity
    • More difficult to raise capital

Partnership

  • Advantages
    • Ease of formation
    • Low startup costs
    • Additional sources of venture capital
    • Broader management
    • Limited outside regulation
  • Disadvantages
    • Unlimited personal liability
    • Lack of continuity
    • Divided authority
    • Difficulty in raising additional capital
    • Hard to find suitable partners

Limited Liability Company

  • Advantages
    • Limited liability
    • Flexible management structure and ownership
    • Continuous existence
    • Legal entity
    • Easier to raise capital
  • Disadvantages
    • More expensive to organize then a proprietorship or partnership
    • More regulations then a proprietorship or Partnership

Corporation

  • Advantages
    • Limited liability
    • Specialized management
    • Ownership is transferable
    • Continuous existence
    • Legal entity
    • Easier to raise capital
    • Unity of action account having centralized authority in board of directors
  • Disadvantages
    • Closely regulated
    • Lack of continuity
    • Charter restrictions
    • Extensive record-keeping necessary
    • Double taxation, except when organized as an “S” Corporation
    • Difficult to liquidate investment

There are other structure also can be considered to determine the best structure for your new business set up.

 

  


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Comments (1)
ronn   wrote on : Wed Apr 25th,2012
starting a almost new computer repaire place tryin to do llc or something else.
Reply : infotaxsquare.com
 
Dear Ronn:

Thanks for choosing InfoTaxSquare.com for your business needs. Can you  please let us know what state do you want to Create  LLC or a Corporation.

You can either use the following link to choose the best structure for your corporation or call us 516.822.3100 to discuss in person.

http://www.infotaxsquare.com/e_book/


Committed to give our users most updated news!
For instant news please subscribe at www.InfotaxSquare.com


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