How to Pick the Right Business Structure for your Business
Choosing a business structure is often challenging because there isn’t one specific structure that will work for every type of business. Many factors come into play including the number of owners of the business, the type of business, its current and future financial situation and more.
A South Florida business formation attorney can help you figure it out by looking at the expenses and procedures involved with running each business structure, the liabilities of the business, the liability protection that each business structure offers, income taxes, your investment needs, and other relevant details.
Sole proprietorships normally don’t have special paperwork or fees
There’s a large difference in expenses and procedures between sole proprietorships and partnerships versus LLCs and corporations. Sole proprietorships and partnerships typically have no special paperwork or fees that are necessary in order to establish the business in Florida.
LLCs and corporations, on the other hand, require more paperwork and fees to establish. For example, corporations and LLCs must file their Articles of Incorporation or Organization with the Florida Division of Corporations at the Department of State.
The riskier that your business operation is, the more that you should limit your personal liability
As far as liabilities are concerned, the riskier your business activity is, the more you should try to limit or completely remove your personal liability. In partnerships and sole proprietorships, the owner or partnership is directly and personally responsible for any and all liability claims against the company. In LLCs and corporations, however, personal liability is greatly reduced.
Each business structure has different taxes
Sole proprietorships, partnerships, and LLCs are often called “pass-through” tax entities, because the taxes on the business profits and losses pass through to the business owners and their personal income taxes.
Corporation owners, however, don’t pay taxes on the net profit, they only pay taxes on the profits they use for dividends, salaries, and bonuses.
A South Florida business formation attorney can give you detailed information the income taxes that you can expect to pay with each business structure.
Corporations allow stock to be issued
S corporations and corporations allow stock to be issued while the other business structures do not. Corporations typically use stock offerings as an incentive to retain their employees or to attract investors.
Picking the right structure is a major step for your business and one that should not be taken lightly. There are many other details involved with business structures, and because every business has unique requirements, it’s a wise idea to meet with an experienced South Florida business formation attorney before making a final decision.
Mark Schecter at Schecter Law can help you pick the perfect business structure for your current or future company based on your unique requirements. To schedule a consultation, call Mark Schecter today at (954) 779-7009.