The recent economic uncertainties of the past year may have you wondering whether you want to continue working for someone else or if it may be time to take your great idea and start your own business. Perhaps this plan has been on your back burner for years, and now seems like a good time to get your venture off the ground.
No matter where you are coming from, the goal ahead of you will take a great deal of work, countless sacrifices and important decisions. One decision you should make early in the process is the business entity you will choose for your venture. This is not a choice to make hastily, and it involves the consideration of many critical factors, including taxes, liability, capital and others.
The right business entity can make a difference
While it is exciting to focus on creating a perfect website, finding the right office space and building a client list, you also must think about items like your business’ tax burden and your personal liability if something should go wrong. You will also want to decide whether you will seek outside investors or partners in your venture. With all these in mind, you will want to choose the organizational structure that most appropriately addresses your goals. The four most common business entities include:
- Limited Liability Company: Instead of you personally assuming liability in a lawsuit against the business, your company assumes the risk.
- Corporation: This gives you less power over your company and higher taxation but offers more options for raising capital.
- Partnership: You will share the load and the profits as well as some tax advantages, but a partnership may not protect you from liability.
- Sole proprietorship: You maintain control of every aspect of the business, including its profits, but you also carry all the liability.
Some entities require registration with the state and compliance with other state and federal regulations. Your choice of entity will also depend on the type of industry in which you are working since some structures lend themselves more readily to certain enterprises. One good way to learn the additional pros and cons of each of these entities and others is by networking with other Georgia business owners. With a well-constructed business plan, you may be better able to determine the most appropriate entity to help you meet your goals.
