How to Structure Your Small Business
Posted on February 19, 2021 by Stacey Simon, One of Thousands of Executive Coaches on Noomii.
Whichever legal structure you decide on is almost at the level of a moot point if there is no business plan.
Small businesses are difficult to get started these days of making a success. Without a solid business plan, start-up cash, and good location. Also if you rush it, it will be doomed to fail. Yet, one possible advantage is that you can be your own boss. And, of course, there are a variety of resources available to help the newbie out. Talking about your business structure means, what legal organization your enterprise will take. There are three general types, and details about what forms may change from state to state. But in the main, you will choose to be a sole proprietorship, a partnership, or some form of corporation. There are pros and cons which we must investigate.
When starting a small business, one must decide if one wishes to incorporate. Set up shop with a partner (or a few), or do business as a sole proprietor. One of the advantages of sole ownership is that accounting is simpler. There are filing requirements, there are no corporate taxes. And you answer only to yourself management authority. These are compelling advantages, and this structure works for many and professional services and businesses (architect, writer, insurance agent, etc.). Yet, the disadvantages of sole ownership are serious. And can affect your ability to grow in the future. You will find that it is often harder to raise capital, and financing can be difficult to get from banks. Also, on sole ownership, you are liable for all debts incurred by the business. And if sued you could lose your home and any other assets. Whether they are tied to the business.
