One of the first decisions you face as a new business owner is determining the most advantageous type of corporate structure. The choice you make now has a significant impact on the legal and tax status of your company, so it’s important to choose wisely. Below is a brief overview of the most common types of the corporate structure.
Many entrepreneurs start with this status when they first begin working for themselves and don’t yet have any employees. Most also choose to operate their solo business from home. The biggest benefit of this structure is that it leaves you in complete control. However, it’s wise to reconsider working as a sole proprietor as your business grows because it doesn’t offer legal protection to separate your business and personal assets.
This type of corporate structure can include two or more business partners. With a general partnership, all partners share equally in the expenses, profits, and decisions for the company. The status of limited liability partnership means that one person controls the operation while the others only contribute financially. Those in the latter category may receive less of the profits.
Limited Liability Corporation
The benefit of an LLC is that it offers a hybrid corporate structure. Partners, owners, and shareholders can all limit their personal financial responsibility for the company while still enjoying the legal benefits and flexibility that comes from forming an LLC. This status protects members from putting their personal assets on the line as long as they don’t act in an illegal or unethical manner.
Legally, a corporation exists separate from the people who own it. That means others can sue the corporation, it can sue individuals and businesses, sell property, own property, and sell stocks that transfer some of the ownership of the corporation.
Do you need additional guidance to choose the right corporate structure for your business? Purevue Capital is here to help. Please contact us today.