One of the many decisions facing you when you are in the process of starting a business is to decide which legal structure you want for your business. There are several and each offers you something different. By understanding each of them, you will be best equipped to decide which fits your needs.

The simplest one is the sole proprietorship. If you are the only owner of your company this may be a good choice. It gives you the most control over your business. However it does not allow for partners, silent or otherwise. It also gives you no protection in terms of liability if your business were sued. You would be personally responsible. This is usually a very advantageous legal structure when it comes to taxation.

Incorporating your business gives you the least amount of control as your business is actually considered its own entity. Because of this status however, you are protected best against being held liable for loss that another person suffered at the hands of your company. It can be the most or the least advantageous way to deal with taxation of income. An S corporation gives you limited liability and your income is taxed only once. A C corporation has double taxation.

By bringing in partners you typically lose some of the control over your business. However, you also share the liability in the case of general partners. Limited liability partners are limited to only the amount they have invested in your business, but also do not have control over the business.

If you have doubts as to which of these is the right fit for you, talk with a business advisor, accountant or lawyer.

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