Should you launch your business as a sole proprietorship, partnership, LLC, or something else? There are many options, but which would be the right decision for YOUR business? Decisions, decisions, decisions!
The U.S. Small Business Administration defines the types of business structures as follows:
- Sole Proprietorship - A sole proprietorship is the most basic type of business to establish. You alone own the company and are responsible for its assets and liabilities.
- Limited Liability Company - An LLC is designed to provide the limited liability features of a corporation and the tax efficiencies and operational flexibility of a partnership.
- Cooperative - People form cooperatives to meet a collective need or to provide a service that benefits all member-owners.
- Corporation - A corporation is more complex and generally suggested for larger, established companies with multiple employees.
- Partnership - There are several different types of partnerships, which depend on the nature of the arrangement and partner responsibility for the business.
- S Corporation - An S corporation is similar to a C corporation but you are taxed only on the personal level.
Understanding the pros and cons associated with the various types of entities will be important before you make a decision. The good news is.. we’ve got some great resources to help you decide what will be right for you.