Which Business Legal Structure is Right for you?

In starting a business, you need to determine the appropriate business legal structure that is right for you. This is according to what you want and how you want it to be. Choosing the right business legal structure for you requires a lot of patience and thinking. You don’t need to rush this decision; it must be planned and thought about properly. You can ask for advice but the best way is to follow your instinct and do a little research on the different kinds of legal structure suitable for your business.

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Sole Proprietorship

If you prefer to work alone and want to keep it simple, then this is the legal structure for you. The requirements of this structure depend on the specific type of business you are in and your location. You shall decide on your business name, search the availability and popularity of the name and register it. Then you just have to get your business licenses and permits and you’re ready to go. This is less complicated than the other types and you are your own boss. You do not share the authority with anyone else.

Partnership

If you and your best pal from elementary are still close until now, then you may want to try entering into a partnership business. Although you can also do this with someone you really trust or a family member perhaps. It also follows the same steps as a sole proprietorship, only this time you need to register your partnership name and agreement. This is to make it official and legal, in case you fight with each other or something. This legal structure can benefit you both in the long run but it also has its fair share of complications and disadvantages. One major disadvantage is having unlimited liability wherein you can lose every single cent and piece of property that you have put into the partnership, as well as your private assets.

Incorporated Small Business

Turning small businesses into corporations are getting more popular lately. This business legal structure is definitely advantageous to the proprietor since he can gain investment incentives, legal protection from liabilities and tax benefits. Through incorporation, you will be able to handle and better control your business’s path to success.

Limited Liability Company (LLC)

It is one of the more popular business legal structures; however, it is not an easy process. It has the characteristics of a corporation and a partnership. Additionally, you do not need a lawyer from the start; it may also save you a lot of time and money. You just need to have more confidence in this and have close control over your business.

Non-Profit Corporation

Aside from the usual requirements, here you need to decide where to incorporate your non-profit business, choose directors, create and file the Articles of Incorporation, write your By-Laws and apply for tax exemption status. You should also open a different bank account for your non-profit corporation.

There are still a lot of business legal structures out there that you can use. It is up to you to decide which you feel fits your business perfectly. First you need to consider all the pros and cons and make sure that it is suitable for you and your business. You can combine the aspects of different legal structures as much as you want. And if ever you want to change your type of business, then you can also try another business legal structure.