As you know, you must make many critical decisions when forming a new business. For example, you must decide on a location and which business insurance policies to purchase.
You will also need to decide how to structure your business (sole proprietorship, corporation, etc.). In the modern world, most entrepreneurs choose to create a limited liability company (LLC). Before you rush ahead and end up with a structure that fails to meet your needs, consider the four factors below when forming your business.
Taxation preferences
Entrepreneurs generally have two tax options—corporate taxation or pass-through taxation. With a corporation, you must file a separate tax form for your business. Sole proprietorships and LLCs can be pass-through entities, meaning you can address business taxes on your personal returns.
Owner liability
Can you afford to foot the bill for business-related liabilities and debts? If not, an LLC may be a wise choice for your business. As its name suggests, an LLC can minimize liability for owners or members and safeguard at least some of your personal assets.
Ease of formation
Forming a partnership, sole proprietorship or LLC is relatively informal compared to starting a corporation. Those who incorporate must comply with a formal set of procedures. You may also face more decision-making with a corporation than with a different structure. For example, you must decide which type of corporation (C-Corp, S-Corp, etc.) to form.
Unique (individual) factors
Do not lose sight of your company goals and other issues when determining which structure to choose. For example, if you hope to take on investors, you should know that corporations typically attract more investor interest than other types of businesses.
Learning about Florida business laws during the early stages of business formation can also guide you in making wise decisions.