Types of Business Structures
Since you are starting a business you will need to know what type of structure options that may be formed. The types of business are:
- Sole Proprietorship
- Limited Liability Company
Here is the deal; these are your choices for your business structures. What you need to do is find either a lawyer or a legal service to help you decide which what is best for you.
Sole Proprietorship is when you work as an individual but also a business in terms of no longer being an employee. That means no benefits, unemployment tax, insurance or the rights of an employee. The upside is you are just a person working as an independent contractor. The down side is if you mess up then you can be sued and may be liable for your mistakes for the rest of your life. Also, you are responsible for paying income tax.
Limited Liability Company
The Limited Liability Company is the middle of the road. It offers the protection of a business but passes through the income to the individual.
A Corporation is the ultimate form of protection. It is technically another person. Whatever you do running a corporation you are not liable. The main thing to get if you open a corporation is an indemnification agreement that says you are in no way liable for anything that you have done. That is the law.
The structure of the business you choose is up to you, your accountant and lawyer. Local lawyers do a great job but you can also file for the business structure yourself in your state. The other option is going with a legal service that knows the ins and outs of business and does it at a fraction of the cost. Here are some companies that you can consult about your business structure.