You have called us about starting a business and we are both excited. Last week we uncovered the most important decision before you do a thing:
What type of entity do I need?
A few we covered last week: Sole Proprietorship and Partnership.
You have a few more options though:
- Limited Liability Company: LLCs are flexible and provide liability protection for its members. Taxes can be passed through to the owners. LLCs give you the benefits of both a partnership and corporation.
- Corporation: A corporation is different. It is a separate legal entity from the owners (called “shareholders”). The shareholders do have liability protection. Corporations are taxed separate from its owners and have more complex management; legal; financial requirements. Do not disregard them at the outset.
Often, the choice comes down to these two structures. The final decision usually involves taxes. So, be sure to speak with your CPA before doing anything further – a lot of money is riding on that conversation.
Feel free to contact us today if you need some guidance on setting up your new business.
PS. Here are some factors we will discuss with you as part of your decision:
- Liability Protection
- Management and Control
- Flexibility and Long-Term Growth
- Cost and Complexity
- Tax Implication (this is a CPA question)