Whether you are soon-to-be new business owner or an experienced business owner starting a new venture, there is more to starting a vision than the creative vision. There are some not-so-exciting details, like deciding on a business structure, that can have a huge impact on the success of your small business. Essentially, choosing a certain business structure can negatively or positively impact your business in ways that you may not have even know were possible. There are several options to choose from.
One popular business formation option in recent years has been the LLC or limited liability company. While these can be more work to create and maintain, they can have favorable tax incentives. They also protect the owners of the business from liability better than some other business formation plans. This can be especially appealing if you are starting a business in a high-risk field like the medical field or other industries in which one could face a lawsuit.
However, if you are looking to build a corporation that has a beneficial impact on the community, an LLC may not be right for your business at all. Instead you may want to consider a co-op or non-profit organization. These organizations are perfect for those who are looking to run a community-centered business, and non-profits that qualify are not taxed on their earnings. As you can see, business formations vary widely and it is true that one specific business formation is likely best above all the rest for a developing company.
Depending on the industry one is entering into, you could see how certain business formations and structures could help or harm certain businesses. Finding where your business fits best could have an impact on its future profitability. Small businesses should look for any advantage they can leverage, especially when competing against larger, most established businesses. It is possible to break into the industry and cut out a piece for yourself and your employees.
Source: FindLaw, “Types of Business Structures,” accessed on Oct. 9, 2017