You finally have a business idea that is bound to take the market by storm. However, you are not sure about the kind of structure your business should have. Are you thinking of a sole proprietorship to avoid the hassles of a partnership? Are you thinking of setting up a limited liability company?
The decisions you make now will likely affect your business along the way. Therefore, it is important that you make the right call. Below are some factors you should consider before settling on your business structure.
This is perhaps the most important consideration: The liability of your business will define whether you stand to lose personal property in case things go south and creditors have to recover their debts. Under a sole proprietorship, for instance, the risk of your business will extend to you as well, unlike with a limited liability company.
Control and administration of the business
The structure of your business will also determine how you run affairs. For example, a solo venture may be better for greater control of affairs than a partnership. Administration costs are also lower if you go solo, but you may need to reevaluate the structure in place as the business grows.
It is crucial to have eyes on the future of your business before settling on its structure. Will you need external investment at a point in time? If this is the case, you might be better off with a limited liability company than a sole proprietorship. When making this critical decision, factor in the position your business will be in the next five years or so and have a plan that will adapt to the changing times.
With the right information, you will reap the benefits of having the proper structure of your business and ensure compliance with the relevant laws and regulations. It could be the perfect launchpad to greater heights for yourself as well as your business.