If you are thinking of starting a business, you are probably undecided about the structure you want your business to take. The truth is that there is no best choice, and it all depends on the nature of your business and the objectives you have in mind.
The decision you make is critical since it will likely affect operations and the future of your business. Therefore, it is very important to put all these factors into consideration.
Cost
Due to federal and state laws, it is much cheaper to set up and run a sole proprietorship and a partnership than a limited liability company. Setting up an LLC is also more time-consuming, so you may want to explore your other options if you intend to get things running fast.
Liability
How much protection do you want to have from your business liabilities? With limited liability, your personal assets are protected from losses and debt, which means that creditors can only come after what the business owns in case of insolvency.
Control
Your business structure will determine the amount of control you will have over operations and finances. For example, while you are the overall boss in a sole proprietorship, the same cannot be said if you are in a partnership or a limited liability company where you have to run decisions through other stakeholders.
Termination
With eyes on the future, it is essential to consider the continuity of your business. For sole proprietorships, you can close shop anytime you wish. However, closing down a limited liability company takes more time and involves more paperwork and procedure.
You need to factor in other things, such as expansion possibilities and tax implications, among others. Keep in mind that some decisions you make now could prove costly when you need to readjust. Therefore, you need to take an informed approach before making the final call on your business structure.
