Are you thinking of starting a business but are unsure of what kind of entity would be best for you? An LLC? Corporation? Sole proprietorship? In this blog we will describe the 3 most common business entities and hopefully help you choose what will best suit your business.
Three most common entities:
- Limited Liability Company (LLC)
- Sole Proprietorship
Limited Liability Company –
An LLC can have one or many owners and with an LLC members can be an individual or another business. One of the most beneficial things about an LLC is that as the owner, all of your personal assets are protected if anything were to happen within your business the creditors could not come after anything personal. Aside from that, an LLC is fairly easy to get started and very cost effective opposed to other businesses.
Sole Proprietorship –
This business is run by only one business owner. With a sole proprietorship structured business the owner is held accountable for any and all business happenings. Personal and business finances are intermingled. This type of business entity is more appealing to those who don’t plan to have much growth. Getting this type of business set up is also fairly simple and very cost effective.
There are various types of corporations but overall a corporation is a business that is owned by shareholders and has a lot of overhead from managing directors. Just like an LLC, with a corporation your personal assets are protected from all business creditors. Those who start up a corporation typically plan to grow into a very large business and have multiple partners within the business.
These are few of the many entities that you can create although these are the most common. Now, as with any of these we would highly recommend getting legal advice. Don’t forget we’re always happy to help if you need any advice and/or business consulting! Give us a call, we’d love to point you in the right direction!
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