Guide To Choosing Your Business Legal Structure
Putting up a business requires that you have a clear blueprint and in order to set things in motion, it is important to determine the business legal structure that will best suit your company’s projected operation. For the most part, it is hardly a one-punch option but more in identifying first what works to make for a solid start.
Having the right structure from the start will give you a definitive sense of direction and will allow you to anticipate the things that eventually will need addressing such as the necessary paperwork and tax concerns. Also, when growth starts shaping up on the horizon and expansion becomes inevitable, the structure you selected for your business will be key to open the door for raising money.
What Business Structure Fits Best
It might be tempting to just take the plunge and roll out a business on a mere gut feel. But the better way is to seek the advice of competent professionals – lawyers and accountants who can paint a vivid picture of the upsides and downsides of the various business entities.
For instance, sole proprietorship seemed to be the simplest of all business operations as it is largely a one-man show. The business owner has the exclusive say on everything and in the same way, he or she will reap all the benefits. No one else will share the pie of the profits.
In many cases, however, working with a team promises a greater possibility of success. This has been proven by the incredible tales of numerous start-ups that later on morphed into tech titans. On this, the success stories of Apple, Microsoft, Google, and Facebook readily come to mind. They are the prime examples that partnership and corporation are the tried and tested roads for raking in billions.
Admittedly though, it’s not always easy to follow the ways of the giants. For many, the most compelling entity has to be the limited liability company (LLC), known in the business world as the hybrid kind of partnership. LLC is attractive because it affords the chief advantages of both the partnership and corporation types of business operations.
Most importantly, LLC is a breeze to set up. The whole process can be initiated online through private agencies, and if one would ask how much does an LLC cost in Alabama, the state government charges a fee of $200 for domestic filing and $150 for foreign filing. Across the United States, the cost ranges between a low of $40 and up to $500 that cover the initial works of establishing the LLC form of business operation.
Important Things To Note Before Making Your Decision
Now while one business structure would appear relatively easier to take on than the other, in the end, the choice will all boil down on owners’ preference and how they envision the company will be. It could be that LLC or sole proprietorship is favored by many but the final decision on the choice of an entity must be based on these crucial factors – flexibility, liability, tax structure, and industry regulations. These elements will make an impact on the company over the course of its business operation.
It’s important to note as well that a company can always transition from one business structure to another when the need arises. This normally happens in times of success and when an expansion is warranted.