The Ultimate Business Law Guide; Choosing the Right Business Structure
by JimD, Former Moderator
- Created: August 6, 2010, 6:00 am
Deciding how to register your business can be a daunting task if you do not know all the ins and outs of the different ways you can structure your business. Differences in taxing, liability and administrative fees all have to be balanced when you choose a business structure. For this reason, w;ve created this-ultimate guid- as a go-to resource to help you pick the best business structure.
Since the Community launched early last year, members have posted countless questions and concerns about how to properly start and run a business. One topic that comes up time and again is what business structure is best for them and what the differences are between a sole proprietorship, partnership, corporation, or limited liability company (LLC). Below, w've pulled together our top business articles that offer practical tips to effectively resolving your business conflicts and getting back to business
Should You Incorporate?
When starting a new business, it can quickly develop into something larger causing a need for you to incorporate. Sometimes it is better not to incorporate, but looking at the different options is a good practice especially when you expand or change your business. Is Incorporation Right for Your Business? A Primer for Small Business Owners and Entrepreneurs gives an overview of benefits and disadvantages of incorporating your business.
Before You Register
Do your research on what business structure is best for you. The first step is to understand the different types which you can read about in the Business.go's Incorporation Guide. This guide has links that have more specific information on each type, such as different variations, taxing, advantages, and disadvantages. For a good comparison of taxing, liabilities, and administrative fees on the different structures, check out Differences in Legal Structures' Which Structure is Right for You?
One type of structure that has a lot of confusion is Limited Liability Companies (LLCs) since it is a hybrid legal structure. LLCs Explained' A 101 for Small Business Owners provides basic information on what is a LLC and if it is right for your business. S-Corps and LLCs have many similarities, so specifically take a look at The Better Choice for Entity Selection: LLC or S Corporation? and Should My Company be an LLC, an S-Corp or Both? for some of the differences.
Another thing to consider before registering your business is if you want your business to have Non Profit status. A Non Profit is a business entity where making a profit is not a primary mission. Typically, Non profits are engaged in charitable, educational, religious, or artistic activities of public or private interest. Starting a Non Profit organization requires additional steps and requirements to obtain the status of Non Profit from the IRS.
After You Register
Understand what you need to report and what forms are necessary, especially tax forms. Depending on the business structure you registered as, you will need to report your financials on a variety of tax forms. The IRS has guides and lists of required forms for each type business structures.
After registering your business, you may want to change, expand, or shrink your business. This can make it beneficial or necessary to also change your business structure. Changing your structure should not be a problem, but you want to make sure you communicate with all the proper federal, state, and local agencies. 4 Steps to Changing Your Business Structure is an article that goes over the steps and what to expect when you change your business structure.
If you get confused with any procedures or requirements or just want additional help, check with your local SBA Offices or ask a question on the Starting or Registering a Business discussion board in the Business.gov Community.
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