Owning your own Arizona business may be a long-held dream of yours, but taking this step is much more involved than simply buying a storefront and opening your doors. There are many things you would be wise to handle before you launch, and one of these matters is choosing the right legal structure for your business.
Your choice of business structure matters. In fact, it could have a significant impact on how your business operates and even influence your success in the future. Making the right choice is critical, but it is not a step you have to take on your own. With guidance, you can take a path that allows your unique and specific type of business a better chance of success.
Which entity is right for your business?
There are many factors to consider when making the choice for your business structure. You can make this determination based on the type of business you will have, whether you will have partners and other matters. Some of the most common types of entities include:
- Sole proprietorship: This is best for single-owner businesses, and it gives you complete control over your business. In a sole proprietorship, all business assets and liabilities are not separate from personal assets and liabilities.
- Limited liability company: With an LLC, you can have the benefits of both a corporation and a partnership. This structure protects you from some liability, meaning that most of your personal assets may not be at risk in case of bankruptcy or a lawsuit.
- Partnership: This option is for two people who jointly own and operate a business. There are two different types of partnerships, and the partners' liability is different with each.
- Corporation: The cost of a corporation can be high, but it may offer owners the strongest protection against personal liability for business-related debts. Corporations also pay income tax on all profits.
It can be beneficial to seek guidance when making this important choice and handling other issues related to starting a business.
Protecting the future of your business
Your choice of a business entity will have a significant effect on the future direction of your business. From the costs of running your business to the tax implications of your decision, there is much to consider when forming a business, no matter what type of business you will have.
Before you move forward, you would be wise to be closely familiar with your options and the requirements of your preferred entity, as this will allow you to make the most appropriate choice for your business.