Congratulations! You're probably reading this page because you would like more information to help you to decide which business structure is best for your company. We're glad that you are weighing your options carefully so that you can make an informed decision. After all, the structure you select for your entity can have important legal, accounting, and tax implications.
Business owners have several options to chose from when selecting a structure for their businesses. You can opt for the sole proprietorship, partnership, LLC or the C Corporation. We encourage you to meet with an Accountant and an Attorney to make sure that you understand the financial and legal implications for your specific situation. Book a strategy call with us to decide which entity type is best for your business from an Accounting perspective. We can even help you get all of your filings completed so you can get started the right way-right away!
A sole proprietorship is a business in which there is only one owner, who has unlimited liability. There is no legal separation between the owner and the business. The sole proprietorship is the oldest and most common business structure in the United States. While the Sole Proprietorship is the easiest structure to form, there may still be IRS, state, and local filings that need to be performed to ensure your business is set up correctly.
A partnership is a legally binding agreement that exists between two or more people to share in the management and profits (or losses) of a business. This agreement does not have to be written. However, to protect yourself, you should seek legal counsel on drafting your partnership agreement. Partnerships are 50-50 by default but ownership interests, paid in capital, and profits/loss percentages can be adjusted to the partners' specifications in the partnership agreement.
Limited Liability Company (LLC)
There seems to be a lot of confusion surrounding LLCs, why they exist, and what their limitations are. Let's start by defining exactly what an LLC is. First off, the LLC abbreviation stands for Limited Liability Company. We like to think of the LLC business structure as the point where the Sole Proprietorship (or Partnership) meets the corporation. Owners of LLCs are referred to as members. LLC members are afforded the personal liability protection similar to that provided by a C Corporation and the single pass-through taxation enjoyed by owners the Sole Proprietorship (or Partnership).
The C Corp is probably the most well known business structure in the US. The C Corp has its own legal identity separate from its owners and shareholders. The C Corp must have a Board of Directors in place to oversee management and ensure that the actions of leadership are in line with the goals of the organization. .
Our firm believes with all the uncertainty in life and business that your monthly accounting expense should not be one of them. Contact us for a free strategy call to see how we can help!