The business structure is one of the first things you’ll have to decide on when starting your company. There are different forms of business ownership for you to choose from and the structure you decide to go with will have long-term implications. It’s best to to consult with an accountant and an attorney to go over the various forms of business ownership with you so you’ll select the right business structure for you.

There are many factors to consider when deciding on a business structure.

• What is your vision regarding the nature and size of your company?
• How much control do you want?
• What is the level of structure you’re willing to deal with?
• How vulnerable is your business to lawsuits?
• What are the tax implications of the different forms of business ownership structures?
• How much profit (or loss) do you expect?
• Will you need to reinvest earnings into the company?
• Will you need to get cash from the company for yourself?

Here are the different forms of business ownerships. These are the basic business structures that you’ll need to consider when starting your own company.

Sole Proprietorship

This business structure is for the sole owner or a married couple. It’s simple, informal, and inexpensive to form. You run the company, can transfer all or part of the company, are responsible for all business debts, and can earnings on personal income tax returns.

Limited Liability Company (LLC)

This form of business ownership is favored for small businesses because it limits personal liability while letting you enjoy the tax advantages of sole proprietorships and partnerships. Company earnings can be passed to its members or can be reported as a corporation. This business structure does not have stock and is run by owners called members.

General Partnership

This business structure is jointly operated by two or more persons or entities as mentioned in their agreement. Earnings, loss, and management are shared by the partners. Partnerships file an informational return instead of paying taxes and individual partners report profit and loss on their personal returns.

C Corporation (Ltd. or Inc.)

This business structure is more complex than the forms of business ownership above. The corporation is a legal entity apart from the owner who owns shares of stock in the company instead. A corporation can be made for profit or non profit and is subject to changes in licensing fees and government regulation. Profits are taxed corporately and when distributed to share holders.

S Corporation (Ltd. or Inc.)

This business structure is a lot like C Corporation, but the difference is that double taxation can be avoided. If the IRS approves the S status, taxes occur similarly to a partnership. Shareholders are taxed on their individual returns instead of the corporation being taxed.

These are the basic forms of business ownership availbe. Other business structures are also available in some states only. Check with your state for other forms of business ownership. Read about business name registration for information on registering an assumed or fictitious name for your company.

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