What is the best business structure for me?
If you are starting a new business, even if you have been operating a business for some time, one of the most important questions to answer is, “what’s the best business structure for me and my business?”. If you ask a lawyer, the answer will likely be “it depends.” It depends on who you are, how many of you there are, what business you are in, what your objectives are, and where you are. Your structure will determine how your taxes are filed/paid, how you get paid, and what type of protection you will have against the liabilities of the business.
Because there is so much to consider, a business structure is not a one-size-fits-all proposition and the decision should be made only after you have seriously considered the various options. At the same time, in most circumstances, the decision does not have to be difficult and the structure does not need to be overly complicated and expensive. There are many excellent resources for business owners and a ton of information available about the various structures; therefore, this article is being written, not as legal advice but as a short summary of the various business structures and a link to some excellent resources to help you research your decision. Of course our advice is that you discuss your specific circumstances with a business attorney who will help guide you through this important decision.
I recently read an online article in Entrepreneur Magazine that did a great job of briefly identifying the various options available to small business owners and the issues that should be considered (“Choose Your Business Structure”). In the article, the author interviewed a man who had been involved in several start-up businesses who said “I’ve heard horror stories from people who, in hindsight, wish they had taken the time and spent the money to get expert advice upfront.”
I can’t agree more, as I have also seen many business owners have to deal with major issues that could have been solved in the beginning with the creation of the right business entity and governance agreements.
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