Starting your own business is quite possibly the most exciting decision you’ll make your entire working life. But once you take that leap of faith you’re faced with a great big stack of questions.
Most of these are kind of exciting—which products or services am I going to sell? How am I going to get my new brand out there? What am I going to do with all that cash when I’m heading up the next Google? (OK, maybe don’t spend too much time on that last one).
But alongside the fun stuff there are some rather more boring—but equally important—questions you need to be asking. Over the course of the next few weeks, we’re going to focus on one of these in particular:
Which business structure is right for me?
When setting up your business, you’ll soon realize there are quite a few different business structures available to you. It can seem confusing at first, but for the purposes of this series of articles we’re going to explore the three or four most new businesses pick, namely:
Sole Proprietorship
Corporations (specifically C-Corp and S-Corp)
LLCs
While there’s no right or wrong answer here, the legal entity you choose for your business will impact things like your tax bill, your ability to raise funds, and legal implications should you be sued, so it’s vital you get it right.
This question isn’t just for new businesses either—over the years I’ve seen a shocking number of firms that are losing a ton of money by virtue of being classified under a sub-optimal business entity.
The good news is, there are clear pros and cons to each structure, and generally speaking there will be an option that makes more sense for your business than the others depending on your current situation.
Over the course of the next few weeks, we’re going to cover each of the legal structures I’ve mentioned above in a little more detail, exploring the benefits and drawbacks and discussing the kinds of situations where each may be suitable.
