Small Business Legal Structures
This is the first of a multipart series explaining the different small business legel structures.
Small Business Legal Structures
Small business ownership, risks and the future of your business are affected by its legal structure. With this in mind, you can see why choosing the legal form of your business with care is important.
Also consider that structure can…
-Protect you from ‘avoidable’ risks
-Help you to minimize your tax liability
-Save you time and minimize paperwork
-Avoid government regulation and red tape
-Common Small Business Structures
The most common business structures are—
-Sole Proprietorship
-Partnership
-Corporation
-Limited Liability Company (LLC)
Advantages and Disadvantages
There are advantages and disadvantages to each type of business structure, and each must be weighed carefully before choosing which type you will adopt.
Most small businesses start as a sole proprietorship or partnership because each is simple and cost-effective.
On the other hand, there are some distinct advantages to a Corporation or Limited Liability Company (LLC). Unlike a Sole Proprietorship where the owner is personally responsible for every aspect of the business, a Corporation or LLC is considered a separate entity. In other words, the a Corporation or LLC is responsible for all of its profits and losses, and accountable for taxation laws.
Your Need for Legal and Tax Advice
The following is a broad overview of the primary legal forms of businesses. Although we are happy to share this information with you, and the information is thought to be accurate, it should NOT intended to be legal advice nor should it be used as a substitute for legal advice on matters related to business organization, taxation, estate planning, or other business and financial management matters. Consult with your legal and tax advisers before making decisions.
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