If you want to grow your business, it’s vital that you choose the right business type. Every type has its advantages. It’s just a matter of what you feel works best for the business you want to create. In general, you’ll be choosing from sole proprietor partnerships, LLCs, or corporations. This guide will talk about your various options and how you can decide which is best for your company.
How Do You Start Choosing the Right Business Type?
There is a lot that goes into choosing the right type of business for you. First, there are your company’s goals and just how big you’d like to get. You must also consider local, state, and federal laws. Your choices include the following:
- Sole proprietorship: A sole proprietorship is the easiest to start. In many states, if you don’t register your business type, it is the default type. A sole proprietorship gives you complete control over the business. The downside, however, is that your business assets and legal responsibilities are solely yours as well. It is also more challenging to raise money, which limits growth.
- Partnership: There are two types of partnerships, an LP (limited partnership) and an LLP (limited liability partnership). LPs have a single partner with full liability. All other partners have limited liability and limited power. LLPs give limited liability to all partners, so that another partner’s actions won’t affect the others. Partnerships limit growth but are great for businesses that want to try out a business plan before committing.
- Limited liability company (LLC): An LLC gives you the benefits of both a partnership and a corporation. An LLC protects your assets. However, you are considered self-employed and have to pay those taxes. Furthermore, many states limit how long an LLC can last.
- Corporation: A corporation is separate from its owners and is considered its own entity. This structure protects your personal assets and allows you to sell pieces of your business (stock), facilitating fast growth. It is, however, the most complicated structure to set up.
It’s Better to Be Proactive than Reactive to Maintain a Healthy Business
You can gain access to the most comprehensive business legal advising plan when you form your business through Launch by LegalShield. The benefits of a plan include:
- Consultation with an Attorney
- Business Formation Documents and Filing
- Optional Kit and Seal for Your Business
If you’ve already launched your business, then consider how to protect your enterprise with affordable legal advice. Small business owners often forgo the advice of legal experts for fear of costly retainers waiting until problems balloon into problems out of their control. A LegalShield subscription gives you access to legal services like contract and document review, calls and letters written on your behalf, and debt collection letters all for an affordable monthly fee.
How We Can Help
Finding the perfect business type to help scale your business can be difficult. Our Business Quad Squad program can guide you to help decide the right business type. Contact our team of experts for more information about our comprehensive business consulting services.