Ways to Structure your Business: Which is Right for You?
Choosing the right business structure for your company is one of the most significant choices you will be faced with during your business career. The kind of business structure you choose will have an effect on how vulnerable you are to litigation, how you file your taxes, your ability to raise money for the company, and the volume of paperwork you’ll have to maintain throughout the life of the business. This discussion will compare the basic business structures so that you can decide which one is right for you.
This is a very popular business structure, and it’s one that’s ideal for the person going it alone in business. It’s also the simplest one in terms of structure, and when you file your business taxes, they can be included right along with your personal taxes. One of the most serious disadvantages of a sole proprietorship is that you can be personally liable for the actions of your business, which means anyone who sues your business can also come after your personal assets. You will probably also have difficulty raising money for your business, and will end up having to rely on your own financial resources.
If there will be two or more people involved with running your company, a partnership may be the way to go. General partners share all responsibilities and profits, whereas limited partnerships will have at least one member who only provides financing, but does not share in the responsibilities of running the company. In a general partnership, the general partners are again liable for any debts incurred by the company, so personal assets are at risk. There’s more paperwork and legal counsel involved with establishing and maintaining a partnership.
A corporation is a separate entity entirely from its owners, and that means owners are insulated against litigation or loss of assets. A corporation also enjoys the legal status of being able to raise money through the sale of stock, although it typically must maintain much more paperwork in accordance with the business structure. Corporations are typically subject to much greater regulation by government agencies, which in turn means there will be more tax services and more accounting services necessary to support the business.
Business financing with Ironhorse
You can get your business on a sounder footing with financing through Ironhorse. Contact us so we can discuss with you the many options for funding which we can make available to your business, so you can experience the growth you’ve always hoped for.