In starting a small business, business structure plays an essential role. The business structure chosen can influence everything from daily operations to taxes and how much personal assets will be at risk. Select a business structure that provides the right balance of advantages and legal protections, which is explained more in this blog. A business structure affects these several areas:
- How much do you pay in taxes
- The ability to raise money
- The paperwork needed to file
- The personal liability
You must pick a business structure before registering the business with the condition. Most business needs to get a tax ID number and files appropriate permits and licenses. You need to choose carefully when converting to a different business structure for future plans, there can be restrictions based on the location. It can result in not intended dissolution and tax consequences.
It can be a big help when you consult with a business counselor, attorney, and accountant that can prove helpful.
Common business structures
It can help if you do a review of common business structures, such as:
- sole proprietorship
These common business structures are very essential to understanding and learning what they cover as a type of business structure. Then, as an individual planning to run a new venture small business, you need to have knowledge of these business structures to help you decide which type you will get involved with. Designations like non-profit and S corp are not strictly business structures; they can be understood as tax status.
Also, it is possible for the Limited Liability Company as a non-profit, S corp, and S corp. The arrangements are far less common and are more difficult to set up. If you consider one of these non-standard structures, speak with a business attorney to help you decide.
Comparing business structures
Compare the general business structure traits. But, remember that ownership rules, taxes, liability, and filing requirements for every business structure vary by state.
Choose a business name
Find the right business name with market research and creativity. Once you have picked the name, you must protect it by registering it with the right agency. Registering a business name protects the business and can duplicate of business name. Every business has a different name and it is required under corporate law to have every business’s own unique name.
Choose a business name reflecting the brand identity and doesn’t clash with the types of goods and services offered.