A Guide on Choosing the Best Business Structure for Your Company
There are a lot of things in the finance and business world that can be quite confusing. If you’re adjusting the process of starting out, you’ll realize that there are very many things that can be challenging. There are very many businesses that are usually added every year. Specifically, you have more than a million businesses started out every year. If you are among the many people that are starting their businesses this year, you want to ensure that you’re very careful about the business structure you’re going to choose. You’ll realize that your business is going to be influenced a lot by this especially in the future or as you continue growing.
Knowing the differences between the different types of business structures will be a very good place to start. The advantages and disadvantages will also be quite important for you to understand. It will be possible for you to choose the best position for your company and you have this kind of understanding. It may seem to be a very easy position but you can actually simplify it. You have some options that you can choose from when it comes to business structures. The first option that you have available is the partnership . With the partnership business, multiple people start the business and then distribute the profits.
The partnership business is also going to involve proper sharing of liabilities between the partners. Depending on how the partners are going to agree on the sharing of profits and liabilities, you have a very simple structure, you will quickly realize that most of the time it is done equally. Every partner in the business will have to track of their own profits and losses and then, make the necessary filing to the IRS. This business structure can be very good for you especially when you have a group of like-minded individuals. The sole proprietorship business structure is also another option. In a sole proprietorship business, you will have a business being operated by the owner. The income of the business and the income of the owner or the operator is the same.
More than 73% of businesses in the US use the sole proprietorship structure. This kind of business structure however has limited because although it is very simple to run, it also means that expanding can be difficult because of limited financial resources. The limited liability company is the other option where you get to form a company, there are many advantages of an LLC. This is going to have separation of liability between the owners of the business and the business.