An oversight some newbie business people make is assuming that opening their business is just a matter of getting licensing and beginning operations. The truth is one of the crucial decisions you would have to make is decide what type of entity your business will be recognized as. This is why it would be essential to engage the services of a business lawyer so you can have the appropriate advice on what type of entity would be best suited for your individual business endeavor. If you are opening a new business, the following are a couple of the entities that you could file it as.
File it as a corporation
Opting to file your business as a corporation is one of the more regimented entities you could consider. This type of business entity is legally considered as a completely different entity from the owners of the business. As such, the corporation will have its own individual legal responsibilities as well as business rights. One of the advantages of opting to file your business as this type of entity is the owners are excluded from any liabilities pertaining to the business. In the event that anyone wants to sue your business, they would have to sue the corporation rather than the owners.
It should be noted that running a corporation could be more tedious than other business entities. This is because its strict, regimented structure will demand annual meetings, recording of minutes with every business gathering and even additional taxes for the business. Nevertheless, it is an ideal option for people who are going into a business as a group rather than individually.
File is as a sole proprietorship
If you are looking for simplicity when registering your business as an entity, you could consider opting for sole proprietorship. Opting to be a sole proprietor means you will have absolute control of your business. This means that all the pertinent business decisions would ultimately be made by you. In addition to this, all the profits pertaining to the business will be considered as your own personal income.
It should be noted that sole proprietorship does come with added responsibilities. For instance, you will also be personally liable to anything related to the business. For instance if your business is to go into debt, you may lose personal assets such as your home or your car. In addition to this, in the event someone decides to sue your business, you will also be litigated, as you are part of the business. This is why it is essential for sole proprietors to seek legal counsel on the best forms of business insurance to use to protect their company.