Four basic structure types are available:
- Sole proprietorship
- Partnership — general and limited
- Corporation — S corporation, C corporation
- Limited liability company (LLC)
The choices can be complicated — and errors can be costly. Business legal structures are regulated by state governments, but your county or municipality also may have license requirements. What’s more, current tax laws make it difficult to change your legal structure after you begin operating. Making the right decision before you open for business is very important. How do you decide which legal structure is best for you and avoid potential problems? Consult with a certified public accountant (CPA). A CPA can help you make well-informed choices, explain how business structure affects your organization’s bottom line and file the necessary paperwork to start your business, if you’d like.
We have included the basic pros and cons of each structure in the chart below.
This is a complicated subject. To learn more about each structure and how to compare and determine which one is right for your business, read or download our Guide to Selecting Your Small Business Legal Structure or contact your SKR+Co tax advisor. We are happy to answer your questions and help you make the best choice for your specific situation.