Which type of entity is right for your new business?
If you’re starting a business, one of the most important decisions you’ll make is which type of entity to operate your business within. Your choices include a sole proprietorship, C-corporation, S-corporation, general partnership, limited partnership, and limited liability company (LLC).
So, how do you choose? You’ll want to consider the various tax, legal, and business implications of each one. You should also know that once you select an entity type, it can prove very costly to change it down the line.
At Apel, we think you should understand the importance of choosing an entity by thinking about it like this: Even though the correct choice may not in and of itself create success, the wrong choice could actually increase your likelihood for failure. As the saying goes, measure twice, cut once.
A sampling of key considerations
Do you need to protect personal assets and provide legal protection to the owner(s)? If so, that eliminates the proprietorship and general partnership entities. Do you anticipate selling the business in the next 10 years? That may eliminate the C-corporation entity. Do you have any employees other than the owner(s)? If not, then perhaps a sole proprietorship, partnership, or LLC is best for you. Do you need legal protection but don’t want administrative costs and headaches? Consider an LLC.
At Apel, we’ve helped numerous individuals and groups establish their first, second, and even third business. We can help you through the labyrinth of decisions and provide a carefully researched recommendation for the entity type that best suits your business’s needs. Contact us to start your decision-making process off right.