Choosing the Right Corporate Structure When Launching a Business

Starting a business can be an exciting event in any entrepreneur’s life. It is the culmination of hard work, meticulous planning and much thought and consideration. Getting a business underway obviously comes with a host of challenges and risks, but if you have all the pieces in place, you can enjoy tremendous success. Before opening the doors of your business, however, it’s critical to select the right corporate structure for your new business. The following are some helpful hints to making sure your business is organized correctly.

What Structure Makes the Most Sense for Your Business?

Before choosing a structure for your business, you should first be well informed of what the possibilities are and what each encompasses. Not every type of structure is right for your business. Some of the different types include Sole Proprietorship, Limited Liability, S Corporation and C Corporation.

Are You the Sole Owner?

Well before you’ve launched your business you’ve no doubt considered whether you’ll have a partner involved in the ownership or whether there will be any investors. If you intend to be the sole owner, then a Sole Proprietorship is probably your best choice. However, if you’ve got a co-owner or an investor involved, you should probably choose a Limited Liability Corporation.

What Are Your Business Goals?

Part of the planning process for your business should include an outline of what your hope to achieve in your new company. Along with this, you need a well-defined marketing plan—one with which you’re confident will lead to accomplishing your objectives. Once you determine these goals and develop a marketing plan, you’ll have a better idea of what corporate structure is right for you. If you’re starting a small business with modest goals, an S Corporation is a good aim for you.

Consider the Tax Implications

Self-employment taxes can be high and burdensome for your business. Certain structure can keep the taxes down and save you and your company money. A C Corporation probably makes the most sense for you if your business is large.

What Will the Liability Exposure Be? 

Do you intend to promote and sell products that will carry with them potential of liability? Or would the location pose any risks that would be less if you were somewhere else? The questions will help determine your corporate structure as well.

To set you and your new business up for success, be cautious about the type of structure you establish. The right organization will get you off on the right foot.


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