Using the right structure for your newly formed business

On Behalf of | Feb 6, 2022 | business law | 0 comments

Are you ready to take the plunge and become your own boss? Owning a South Carolina business can change your life. Taking the time to learn which structure is the best for your new company can help you plan for the future and provide protection from liability.

The U.S. Small Business Administration recommends researching the types of business structures. Learn how they affect everything from taxes to personal liability before filing the paperwork with the state. Here are some of the most commonly chosen options for new businesses

Sole proprietorship

Sole proprietorships are the least expensive business structure, and they are also the easiest to get up and running. There are no meeting minutes or bylaw requirements, and state registration is unnecessary.

Partnership

If you have one or more people starting the business with you, a partnership is the simplest structure. You may form a limited partnership or limited liability partnership. Liability and control differentiate the two entities.

Corporation

This structure may be beneficial if your business has a medium or high risk. It also allows you to take investments and go public. Depending on your needs, you may choose an S Corp or C Corp.

Limited liability company

You have many of the benefits of a corporation and a partnership with this business structure. An LLC may protect you from personal liability in most situations, and corporate taxes do not touch the profits and losses. You might choose this option if you have significant personal assets and want to pay a lower tax rate than a corporation.

The structure you select has financial, legal and operational implications. Once you choose the business entity that works best for you, get a tax ID number and file for the necessary permits and licenses. An employer identification number allows you to build a business credit identity, which helps you qualify for business loans.