Picking Your Business Structure
Structuring your company will have a significant impact on all sorts of money matters including your taxes, financing (a significant issue according to the The Hartford’s Small Business Success Study), compensation, and insurance. And don’t forget your exposure to lawsuits. Therefore, a business owner’s first consideration is usually: What type of company do I want to create?
There are generally four questions you'll need to answer:
- What kind of liability protection do I need?
- How do I want to pay taxes?
- What are my financing needs and options?
- And, how much administrative complexity can I deal with?
Of course there are other issues too. But when you’ve addressed these four, you should be fairly close to an answer. Here’s a guide to help you understand the pluses and minuses of each type of structure.
Keep in mind that regulations for starting a company differ from state to state. Click here for a list of links to each state’s agency for registering new businesses.