What to Consider in Choosing a Business

What good is a house without a solid foundation? The same goes for your business. Before you choose a business form for your organization, there are many variables you need to consider. Many of these variables are relatively minor, but others will drastically impact the business and tax laws your organization will have to follow. Choosing a business firm is a significant decision that should never be made without considering all of the facts first. 

EASE

Sole proprietorships are the most comfortable business structures to establish. Setting up a sole proprietorship is usually as simple as opening a checking account at your local bank. Partnerships are also relatively simple to set up, but you will have to follow additional rules and guidelines. Corporations are the most challenging business structure to establish, and they involve strict adherence to state and federal laws. Setting up a corporation is also expensive, time-consuming, and complicated.

TERMINATION 

Some business structures instantly dissolve once the owner dies, leaves, or sometimes divorces. Other businesses are only allowed to exist for a state-mandated amount of time. Before you choose your structure, you should consider whether you would want to carry on the business without a partner.

RISK 

In a sole proprietorship, the sole owner of a business will be held responsible in the event of a legal issue. In a limited liability partnership or corporation, individuals can only be held liable to a certain extent. If the business accumulates a significant amount of debt, the individuals' personal property cannot be seized to resolve the debt.

COST 

A sole proprietorship or general partnership is the cheapest structure to set up. Limited partnerships and corporations are far more expensive, and most people will need to hire an attorney to understand and draft complicated legal documents.

OPERATIONS 

If you like the idea of having complete control over your business, you should establish a sole proprietorship. If you are comfortable with having a lesser degree of control, you should consider forming a corporation or partnership. In a corporation, only the members of an executive board will have decision-making rights.

Before you settle on a structure for your business, please consider the information above. Once you choose a form, it isn't easy to reverse your decision. By keeping your own needs in mind, you can select a structure that will benefit your company's health.