One of the most important business decisions you will make relates to the type of business entity or structure that you will use. From corporations to LLCs and more, there are several to choose from, and there are important differences between the options that will make one more suitable than the others. There are three main differences between the business entity types that you should pay attention to when making your decision, and you can learn more about the impacts of these differences when you speak with an Idaho Falls business attorney.
When you speak with your Idaho Falls business lawyer about the different options available, you will learn about how your personal risk for liability can be impacted by the different entity types. For example, with a sole proprietorship or partnership, there is considerable risk for personal liability. With a corporation or LLC, on the other hand, your risks can be moderated. Your personal tolerance for risk as well as the risks associated with your business activities should all be considered as you make a final decision about entity type.
Another point to consider when choosing between an LLC, a sole proprietorship and others relates to the tax implications of the different entities. Consider, for example, double taxation is a well-known disadvantage associated with a corporation. This disadvantage is removed with an S corporation that is established in a thoughtful manner. Your Idaho Falls business attorney can help you to better understand the tax implications of the options available.
The record-keeping requirements are also different for the various entity options. For example, the accuracy and type of records that you keep for a corporation are far different than for a sole proprietorship. This is because of the importance of reporting to shareholders and investors with a corporation. While the record-keeping requirements should be considered from a time and cost standpoint, this should not necessarily limit you. For example, if you project your company to grow quickly over a short period of time, the downsides associated with record-keeping may be countered by the benefits of liability and tax implications associated with some entity types.
While you should consider your current needs and preferences regarding liability, tax implications and record-keeping, you should also pay attention to your future or projected needs and preferences. This will be an entity structure that will be in place for months or years to come, and it can be very difficult to change entity types later. A smart idea is to speak with your Idaho Falls business lawyer soon to learn more about the options and to obtain professional legal advice regarding the entity type that is most ideal for your situation.