If you’ve decided to start a new business venture in Jefferson, WI, you likely have a great deal of organization and activity to complete before you get up and running. One of the elements necessary to get done if you want to operate legally is to choose a business formation. Taking this action places your startup into a specific legal category. Deciding on the best choice for you can depend on factors related to the number of owners in your new venture, tax consequences and liability protection.
Choosing a legal business entity is essential
Deciding on the type of business you’re going to form and operate is an essential legal step when starting a new venture. If you’re finding it challenging to decide on the appropriate path to take, it can help to compare each of these legal entities to see which one suits your business goals and objectives. Four of the most popular types of business entities include the following:
– Sole proprietorship – Operating your business independently allows you to use a legal entity such as a sole proprietorship. Choosing this option places you in the position of assuming full liability for all of the financial and legal issues associated with your new venture.
– Partnership – If you’re opening a new business with more than one person and want to legally share in the profits and losses, forming a partnership agreement may be your best choice. It allows profits and losses to be reported on your individual income tax return.
– Limited liability company – Forming an LLC can be done if you’re starting a venture with other individuals. You can utilize either a partnership or corporate tax return for this business formation.
– Corporation – Choosing to form a corporation provides limited liability protection for each owner. You’ll need to decide if you want to form as a C or S corporation.
Starting a new business requires a lot of planning and consideration. Examining the legal benefits of one entity over the other can help you narrow down the most suitable option for your needs and requirements.