Congratulations! Making the decision to start a business is a huge decision! Your next step is to decide what kind of business structure will work best for your unique business both professionally, legally, and financially. Learning the basic types of business structures can help give you a better idea regarding your business structure options.
How Business Structures Impact Your Business
Your business structure will affect every aspect of your business from your day-to-day operations to how you pay taxes. Certain business structures provide more protection against personal liability and others require a great deal of paperwork. Before you make the decision to register your business, get your official tax ID number, and fill out all your business paperwork, you need to make a decision on which business structure is right for you. Contacting an experienced business attorney can help you make a final determination, however, this brief overview can give you a start regarding your options.
The most common business structures available are as follows:
Sole Proprietorship - This simple business structure does not require as much paperwork, however, you will likely still be personally liable for any debts of the business. The line between business and personal assets and debts is a thin one but a sole proprietorship is much easier to establish. This structure is common among start-ups and smaller companies.
Partnership - A partnership business structure is the simplest business structure that can be created between two people. The two simpler options available for a partnership business would be a limited partnership or a limited liability partnership.
Limited Liability Company - This type of business structure is also simple to adopt. It provides a bit more protection against liability. These companies are also relatively simple to establish.
C Corporation - Establishing a corporate business structure is a bit more complicated, and involves a great deal more time, money, and paperwork. While this is a more challenging structure to create, owners are typically better insulated against personal liability. With this type of structure comes the ability to issue corporate stock and grow a business.
S Corporation - This business structure is also more complicated to establish, however, it avoids some of the taxation involved with a C Corporation. With the avoidance of some taxes does come more complicated paperwork and a deeper understanding of business law.
Contact an Experienced Business Law Attorney
Deciding to start a business can be overwhelming and exhilarating, filled with many decisions. The list of business structures above is not exhaustive, and contacting an experienced business law attorney can help you understand your legal rights, help you determine which business structure is best for your unique situation, protect your assets, and establish a foundation for your successful business.
At De Cárdenas Law Group, we are excited you have decided to start a business and would love the opportunity to help you set up your business for success. You can schedule a meeting with one of our business attorneys in San Francisco or South Pasadena, California by calling (626) 577-6800.