Starting a business can be an exciting time. However, choosing a business structure can have important legal and tax consequences. There are a variety of business formation options, ranging from limited liability companies to partnerships to different corporate structures. Questions such as the nature of the business, the number of employees and the specific needs of the business and the parties starting the business, can be important to consider when selecting a business form.
A limited liability company structure, for instance, is designed to provide personal limited liability protections similar to a corporation, but with a simpler tax structure and operating efficiencies associated with partnerships. LLCs, like partnerships, are not taxed as a separate legal entity the way that a corporation is. Taxes are passed through to the members of the LLC, as they would be to owners of a partnership.
Corporations are legal entities that are separate from shareholders and are taxed separately and can be legally liable apart from shareholders of the corporation. That said, corporations can have more complex and costly administration costs and requirements. LLCs also enjoy limited liability for the members of the corporation. Beyond this, LLCs, partnerships and corporations all have important advantages or disadvantages, depending on the needs of the start-up.
There are a variety of different business forms based on different needs. Selecting a business form can, at times, be complex and technical and involve weighing different factors. Because of this, it is important to be knowledgeable of the different options available and the important implications of each when considering the best business form for a start-up company in Louisiana.
Source: SBA.gov, “Choose Your Business Structure,” Accessed Sept. 16, 2014