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. According to statistics today, very many businesses are started every year. When you look at the statistics specifically, you’ll notice that you have more than a million businesses as startups. 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.
The best thing would be to understand the different types business structure and knowing their differences. It is important for you to make sure that you have understood the advantages and disadvantages. It is good for you to have this understanding in order to choose the right position for your business. It is possible for you to simplify this although it may seem to be a very easy position. You have some options that you can choose from when it comes to business structures. The partnership is considered to be one of the main business structures. The partnership business is basically going to involve some people starting the business together and after that, running the business and sharing the profits.
However, in this kind of business, you’ll also share their liabilities. 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. When it comes to the filing of taxes, every partner is supposed to follow up on their profits and losses and do the necessary filing with the IRS. This business structure can be very good for you especially when you have a group of like-minded individuals. You will also have the option of choosing the full proprietorship business structure. 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. There is also the problem of the limits associated with the sole proprietorship . The other option you have available will be the limited liability company, you want to consider the advantages of an LLC. There is very good separation of liability between the owners and the business.