When starting a new business, there are many decisions to be made. What will the business do? Where will the business be located? Where will the business do most of it's work? How many employees will the business have?
One of the most important questions that many people fail to ask is, how will my business be organized? In other words, what is my choice of entity?
Traditionally, businesses were organized as Corporations, Partnerships, or Sole Proprietorships (just doing business as yourself). Today, there are many more variations on these general types of business, each with its own benefits and detriments. No one entity does everything perfectly, and which one you choose depends on your unique goals.
For example, is your goal to grow large enough to become a publicly traded company? You may want to look at "C" Corporations. Do you want to protect yourself from personal liability while reducing the taxes that you pay? A Limited Liability Company (LLC) may fit your needs. Do you have a family owned farm that you want to protect for future generations? A Family Limited Partnership (FLP) may be what you are looking for.
Making smart decisions when forming a new business will save money in taxes and protect you personally from liabilities that your business may incur.
For the next step in starting a new business click here, or Contact me. For Business Planning Frequently Asked Questions, please click Business Planning FAQs.