Choosing the best structure for your business– sole proprietorship or Limited Liability (LLC)?
You probably already have a rough idea of how you want your business structure to be but may still have a little difficulty understanding whether you should set up a limited liability company or a business name/sole proprietorship. When deciding on the appropriate structure to pick, many people consider the incorporation cost the most important factor instead of the most suitable for their particular business. It is important that when making the decision on which business structure to choose you put into consideration;
- How many people will own the business and;
- What types of services or products the business will provide.
If you know that you will be the only owner of the business, then a sole proprietorship may be your best bet as opposed to a partnership or limited liability company. But if your business will engage in high risk activities, rack up large business debts and have a significant number of investors, then you will not only need to buy insurance, but may want to consider forming an entity that provides personal liability protection which can shield your personal assets from business debts and claims. If you plan to seek investors in order to raise capital or wish to give your employees stock options, then your best option is to incorporate a company.
If these issues raised are duly considered, then choosing a legal structure becomes easier to decide on.
CEO, 618 Bees
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