Launching a new business is an exciting step for a Georgia entrepreneur. If you have dreamed of owning and operating your own company, you know there is much more involved than simply creating a social media profile or locating a physical location from which you can run your operations. There are both financial and legal considerations to take into account at the earliest stages of starting a business, and these choices have the ability to impact your company long-term.
One of the most important decisions you will make during the initial stages of your company is deciding on an appropriate structure. This can determine matters related to how your company pays taxes and your level of liability for company-related debts. It will be important to understand your different options and how you can make a choice that will lay the foundation for your company’s long-term success.
Types of business structures
The choice of business structures comes with potentially long-reaching implications for the future of your business and your own personal financial well-being. Knowing the benefits and potential drawbacks of each one may help you make a choice that will benefit your company for years to come. Options for business structures include:
- Partnership — This structure is for companies founded by two or more individuals who will run the business together. Partners split profit and liability for business debts.
- Sole proprietorship — This business entity is ideal for solo entrepreneurs, and it is relatively easy to form and dissolve. The sole proprietor assumes all liability for business debts.
- Limited liability company — An LLC has characteristics of both a corporation and a partnership. Members receive protection from personal liability for business debts and legal claims against the company.
- Corporation — A corporation is a separate legal entity from the person or people who own it. Owners are shareholders, and a board of directors typically makes decisions and creates company policy.
Starting any type of business is a significant decision, and you will benefit from giving careful consideration to your choice of business entity. The most appropriate decision will depend on the type of business you will run, the nature of your operations, your personal financial risk and much more. As you weigh the benefits and potential drawbacks of each choice, you may find it helpful to discuss your needs with a professional who can provide knowledgeable insight.