One very important decision you will have to make for your business is which legal entity you want it to operate under. Even though you will have the option to change your status as your business grows, making the right decision early in the business incorporation process will save you a lot of time and money. In addition, not having to worry about changing it in the future will provide you with peace of mind, which is always a plus.
When deciding to form a business entity, you have several options to choose from. They include: sole proprietorship, limited partnership, limited liability partnership, limited liability company (LLC), S corporation, and C corporation. The most frequently chosen legal entities are corporations and limited liability companies (LLCs). After carefully reviewing and discussing the common characteristics associated with each with a qualified lawyer or CPA, you will be more prepared to make the right decision for your business.
Common characteristics that business owners review and research before choosing a legal entity include:
- Formation - whether or not you have to file with the state
- Duration - what happens to the company if you should die
- Liability - your responsibilities as the owner
- Operational Requirements - how many laws and regulations you must abide by
- Management - how much control you will have over the company’s operations
- Taxation – one of the most important factors, this includes what tax and non-tax issues will affect you as the owner
Before reviewing these characteristics for each business legal entity, it may be helpful to write down any specific plans and goals for your company in order to make the right choice. Be aware that there are other factors besides the ones listed above that may be relevant to your situation based on your business’ needs and expectations.
Speaking with an attorney about your specific business situation and your industry to get a general overview and recommendations can be very helpful when beginning this process. You can also confer with individuals and business owners that have similar business models to get recommendations.
Deciding which incorporation company is right for your business can be difficult, but once you have chosen the company that best suits your needs, it can provide you with helpful resources and aid in your incorporation process. Consulting a qualified professional, such as your business lawyer, first to get all the facts and figures is always a good idea. After you have gathered all the information needed to make a solid decision, there are plenty of online resources that are available to help you with the process.
In this guide, we will discuss the different types of entities, general terminology, issues and general characteristics associated with each legal entity, costs and benefits, and our tips for success. We will also help you compare pricing from several incorporation companies.
Compare Price Quotes from Pre-screened Incorporation Companies