There are different choices for business entities, including sole proprietorship, limited liability company (LLC), corporation, and partnerships. If you were to only look at one factor in making your decision, you might find it wasn’t the best choice once you look at it from all angles. Here are the factors that you should consider during business formation.
- Liability – Depending on the risk factors for your type of business operations, you may want to consider which business formation affords you the most personal asset protection and least personal liability.
- Future Plans – Each type of business formation has its own process for transfer of ownership. Sole proprietors must be sold in total, partnerships are terminated and new ones set up, and corporations are the simplest, as you just sell your stock.
- Ease to Set Up – There is very little involved in setting up a sole proprietorship, but all other business formation entities have a more complex process.
- Involvement – If you want full reigns on your company, you will only have that as a sole proprietor. A partnership has divided power and a corporation involves a board of directors and shareholders to appease.
- Capital – It is generally easier to raise capital as a corporation. The rules are quite complex for capital raising in partnerships and lenders find sole proprietors a riskier option, making it challenging to get the funds you need.
- Taxation – Each business formation has its own taxation concerns. The dreaded “double taxation” aspect of a corporation can make it less appealing.
If you would like assistance with business formation, turn to us at GPS Law Group. Our attorneys have 58 years of combined experience and we are dedicated to providing you with the best legal services possible. We can walk you through the pros and cons of each entity type and then assist you with the requisite paperwork to get set up. Call today to learn more or to schedule a consultation.