The Best Business Structure for your Business Operation
Now that you know the different types of business entities available for aspiring business owners to conduct their business operations, let us understand which is the most ideal for your business goals.
Although it may seem as a frivolous matter to be spending a good amount of time to choose the business entity type, this effort will prove to be beneficial when your business has taken off successfully. It will determine how much you pay in taxes, the level of risk or liability to your personal assets (your house, your personal savings), and even your ability to raise money from angel investors or venture capitalists.
Hence, the business entity you ultimately decide on is very important.
These questions will help you choose your business type:
Are you starting your business with someone else?
If you are starting your business on your own, you can structure as a sole proprietor, single-director and sole shareholder local company.
If you are starting your business with someone else, you can structure as a partnership or a local company with.
How important is limited liability to you? Do you want your personal assets to be affected by your business?
Business entities that are seen as separate legal entities from their owners provide limited liability protection, meaning to say that your personal assets like house and car will not be affected if your business runs into debts that it is unable to pay off or if your business is being sued.
Such entities are Private Limited Companies and Limited Liability Partnerships.
However, business entities that do not limit liability will result in your personal assets likely to be affected. However, there are options such as certain types of business insurance to help manage the risk of having no liability protection.
Such entities are Sole proprietorships and General Partners in partnerships.
What kind of control do you want?
Sole proprietors and single-director/shareholder in a private limited company have complete control over how their businesses run. The general partner in a limited partnership might also have complete control.
If you co-found a business, you must share control with other partners, members, or shareholders according to your partnership agreement.
To find out more – Contact us here for a free consultation with a specialist