Opening a business is an exciting time for entrepreneurs. Your dream of being your own boss is finally coming true. You have spent hours creating a business plan along with your mission and company goals and you are almost ready to take the next step: making your company a legal entity with the ability to operate in Shelby County. Part of starting a company includes selecting a business structure for your business.
The type of legal entity you choose for your company can have lasting affects on how you run your business. Here are a few things to consider before you settle on a business formation.
Where is your company headed?
What are your goals for the growth of your company? Do you plan to keep things small so that you can run things yourself, without a partner or a large staff? If so, a sole proprietorship might be the right fit for you. However, if you see great potential for your business and you want it to grow, you might want to consider choosing a different structure.
How complex are you willing to get?
A sole proprietorship is one of the easiest legal business entities to create. In general, it only requires you to file a couple of documents with the state and federal government to get things started. A partnership, corporation or s-corporation tend to require additional documents and have different reporting requirements when it comes to filing tax returns.
How much liability can you carry?
With a sole proprietorship, you will carry 100% of the business’s liabilities. In other words, if a creditor or customer decides to sue your business, you will be personally liable and you could lose much more than the company. A corporation, on the other hand, has the least amount of personal liability. For instance, if someone sues the company, they cannot come after your personal assets and are only limited to damages from the business.
If you are planning to start a company, there are various legal issues you must address. Keep the above considerations in mind when it comes time to choose a business formation for your company.
