You have been in lockdown for the better part of 2020 so far and you have been laid off with not much money left in your emergency fund. What you do have is much time to think and think again.
You just received this illuminating idea for a small business, and you want to start right away.
You begin to register your small business online and the first major question you are faced with is what is your business structure? You click on the dropdown arrow and startlingly, you find that brick and mortar business and online business are not included among the selections.
Types of Business Structures
There are different business structures that every entrepreneur needs to know and must decide which one he is going to use when setting up his small business. The diagram to the left mentions just a few. Each business structure has its own unique characteristics and importance for the small business owner since it directs the way the small business is organized.
Here is a listing
- Sole Proprietorship
- Limited Liability Company (LLC)
My goodness, this list looks in part like an alphabet soup! By now, you must be wondering how to make the right choice of business structure from this list. It is critical to choose the correct business structure for your small business before you register your business.
Things to Consider
How many people share in the ownership of my small business?
If your business is solely owned or you have two or more people sharing the ownership help determine the business structure that is best for your small business.
How is my business structure viewed as an entity by the IRS for taxation?
Your small business can be unincorporated or incorporated and your choice will have an impact on how the IRS views your small business and how you report your taxes.
What is the extent of liability or risk that I am prepared to carry for my small business?
Are you a risk taker or are you risk averse? How open to want to leave your personal assets risk? Take some time to ponder this and decide what is the right balance of legal protection and benefits that is comfortable for you.
It is fundamental, therefore, that you make the correct choice of business structure from the very start and we stand ready and able to assist you in this effort. We will give you the due diligence that we gave ourselves in completing this first step with confidence and assistance you need now.