Congratulations, you’re starting a new business! You likely know enough to know that you should establish a business entity but may not be sure which entity is right for you. We don’t blame you! There are various options to choose from, which can make it challenging to determine which is the right fit for you.
It’s important to review your options and decide which entity is right for your business. You may be wondering, what is an LLC? What is a sole proprietorship (aka “sole prop”)? What is a corporation? What’s the difference among them? Well, we’re here to help!
LLC stands for “limited liability company.” An LLC is “a business ownership structure that separates your personal affairs from your business affairs.” LLC owners are called “members” and they each own a portion of the business.
Benefits of an LLC include the following:
Disadvantages to forming an LLC include:
A sole proprietorship is the most common structure business owners choose when starting a business. It is an “unincorporated business owned and run by one individual with no distinction between the business and you, the owner.” The owner is entitled to all profits and is responsible for all of the business’s debts, losses, and liabilities.
Benefits of a sole proprietorship include:
While there are significant benefits to establishing a sole proprietorship, there are also some distinct disadvantages involved.
A corporation is a structure that enables a business to organize as a separate legal entity from its owners. Like the previously mentioned business formation options, corporations have various pros and cons associated with them.
Advantages of forming a corporation include the following:
Disadvantages of a corporation are:
If you’re looking to start your own business but aren’t sure of what your first steps should be, you may benefit from talking to the experts at @VirtualCounsel. With years of trusted experience, we can evaluate your business proposition and help you make the decision best suited for you. If you’ve already decided how you’d like to establish your business, we are here to help answer any questions you have to get the ball rolling.
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