If you’re starting your own business in Ohio, then you understand just how daunting the process can be even before it starts. This is why it is so important to make sure that you take your time understanding each and every part of it. One of the first and perhaps the most important part includes choosing your business structure. Business formation or the structure of the company involves everything from your tax bracket to the number of documents you’re going to be required to fill out. In fact, it could even affect how much money you can make.
When it’s time to choose a business entity, you must understand that it will involve three things: liability, taxation, and record-keeping. The first and easiest one to handle on this list is a sole proprietorship. In a sole proprietorship, the owner has full control but does come with the risk of being liable for any legal issues that arise. A partnership is exactly what it sounds like; it’s two people who agree to share in the profits made. In a corporation, you are protected from being held liable for damages. The benefits are plentiful in this option, but most tend to ignore that a business could be taxed double. The last one and the most popular include a limited liability company (LLC). This one takes the benefits of both a corporation and a partnership. One of the most beneficial includes an avoidance of business profit/loss taxes when they are passed to the owner.
Keep in mind future needs
One of the most common mistakes new business owners make when forming their business structure is not thinking about what the company is going to look like in the future. You should question every scenario, such as what you want the business to look like if you pass away, if you face severe business/personal debt or if you decide to sell your half of the company.
As you can see, choosing a business structure is a very delicate decision to make. A business owner may benefit from utilizing the expertise of a business law attorney.