Selecting the Business Formation that is Right for You, Your Company, & Your Business Goals

Starting your own business can be scary, overwhelming,
exciting, and confusing all at the same time.  It takes a certain type of
person to become an entrepreneur: smart, driven, goal oriented, a risk lover,
detail oriented, hardworking, creative, ambitious . . . and well, you get the
gist.  Starting a business and being successful requires a lot of
different skill sets. Unfortunately, most of us don’t have all of the needed
skills, some of us are planners, some procrastinators, some are creative geniuses
and other financial whizzes.  That is why about 75% of small business are
a partnership or some form thereof and that is why it’s important to not only
have a great idea for your business but to put some thought into what type of
business entity is right for you.  Whether you are starting a business in
Texas, California, Oregon, or Michigan the types of business entities will be
very similar although each state offers their own twists on the general types
of business formations.

The most common business entities are:

·        
Partnership, including limited partnerships
and limited liability partnerships

·        
Limited liability corporations (LLC),
including professional limited liability corporations

·        
Corporations, including professional
corporations

 

Each of these business entities offer distinct advantages
and disadvantages. Before you make a decision you should evaluate each business
entity in light of the following questions:

·        
How many individuals will be involved in the
business?

·        
How will each individual be contributing to
the business?  Equity (money)? Expertise? Labor?

·        
How involved does each individual want to be
in the business on a day to day basis?

·        
How much capital (money) is there to start
the business?

·        
Will the business need additional capital to
continue operations once it is started?

·        
What is the long term goal for the
business?  Stay small?  Become a major player in the given industry?

 

With the answers to these questions you will have a basis
from which you can start your inquiry into the perfect business entity for
you.  Often times when you are starting a business it makes good financial
sense to seek the guidance of a professional.  There are many nonprofit
organizations that assists new business owners, as well as lawyers,
accountants, and consultants.  Check back soon for more information on
each business entity, with a discussion of risks, benefits, and how to’s.

Building a business is exciting and rewarding,  best
of luck as you start your journey!
 
 
Vethan Law Firm, P.C.