Establishing A New Business? Don’t Make This Critical Mistake.
While it may seem like a simple decision, selecting the right business entity at the outset of your business can have considerable short term and long term implications. Dedicating some time to researching what type of business entity is appropriate for your business will prove worth your while. This blog post is focused on considering whether a sole proprietorship or an LLC might be the best for your entity.
Though it’s the most common form of business organization in the United States, a sole proprietorship may not be the most appropriate decision for your particular business. When compared to other types of business organizations, sole proprietorships are the most simple to establish and operate. The only two facets you’ll need for establishment is a business checking account and a business name. Business owners should consult with their locality to determine any permitting and licensing requirements. Though you have full control of your sole proprietorship, business owners also open themselves up to considerable liability in this. Since your personal finances and business finances are intertwined, this could prove challenging under negative circumstances. The tax implications of a sole proprietorship include paying self-employment tax and income taxes. Generally speaking, a sole proprietorship is best suited to small businesses with no employees.
Limited Liability Company
Unlike a sole proprietorship, a limited liability company limits your personal liability and offers considerably more flexibility. Your personal liability as it relates to your business will not extend beyond what investment you’ve made in your business. Not as simple to establish, an LLC requires business owners to file Articles of Organization in the state you’ll be doing business in. Since it is not a tax classification, the tax decisions for an LLC are not as clearly outlined but offer flexibility and asset protection.
If you’re still unsure what business entity is right for you, contact Metroplex Wealth at 817-601-5272 or email at firstname.lastname@example.org.