You may also want to address any areas of perceived weakness by explaining how you'll overcome them or compensate.
You may also want to address any areas of perceived weakness by explaining how you'll overcome them or compensate.You have a business idea, you’ve worked out the operations, and have the funding you need. In this post, I’ll take a closer look at the various forms of legal structures to choose from, including: sole proprietorship, LLC, S corporation, and C corporation.When you start a new business, one of the first decisions you’ll have to make is how to structure your company.
Here’s a summary of the key provisions and implications for the most used company structures.Taking time up front to consider the pros and cons of each possible structure will likely save you many headaches in the future.In certain cases, it can mean the difference between your business’s success or failure.So a husband and wife cannot be a sole proprietorship.This term relates to ownership and not the number of employees.You should consult with a lawyer before making your decision.This is the only organizational form that does not require an application to a state government. You wake up one morning, decide to be in business, and you are a sole proprietor.To obtain LLC status, you must apply to a state by submitting an application with an annual fee (each state is different, but it is generally in the 0 to 0 range).With the state-approved LLC, there will be an operating agreement — think company bylaws.It is on this amount that you will be assessed payroll taxes, via Form SE (“Self-Employment Taxes”), and on this amount, you can create a Simplified Employee Pension Individual Retirement Account (SEP-IRA) or a Solo 401K Plan and reduce your taxable income.This organizational form has the personal liability protection benefits of a corporation without having all the required administrative and governance procedures.