Comparison of Business Structure Options
A sole proprietorship is the most common form. It’s easy to form and offers complete managerial control. However, the owner is personally liable for all obligations.
An LLC protects entrepreneurs’ personal assets from legal judgments against the business.
To set up a corporation, you would need an accountant and likely lawyer to meet requirements. Corporations have set structures and pay taxes. Whereas, LLCs do not and income is taxed personally.
Types of Business Entities
There are main organization types – sole proprietorships, partnerships, corporations, and LLCs. Each has advantages and drawbacks to weigh regarding structure, taxation, liability, and operations.
Choosing the Right Business Entity
Starting an LLC suits most small businesses best to protect personal assets. An LLC allows beneficial tax choices.
Which Type of Company is Best for Small Business?
The type of company that’s best for a small business will depend on how you want your business would be.
If you want to have total control over the company’s activities, you should consider using a sole proprietorship or an LLC. But, if you’re okay with having a board of directors making major decisions, then you can opt for an Inc.
Different Types of Company
Forms of Business Organization:
- Sole Proprietorship: A sole proprietorship is a business owned by only one person.
- Partnership: A partnership is owned by two or more persons who contribute capital to conduct business.
- Corporation.
Conclusion
Charles McMillan. Each has advantages and drawbacks that must be weighed carefully to determine which best suits your needs. Let’s take a look at some of the most common types of business entities and how they might work for your small business.