Starting a business can be an extremely stressful endeavor. Starting a business with the specter of failure that could potentially bankrupt the business owner is usually enough to deter a lot of potential entrepreneurs. However, choosing the right business structure for your business gives entrepreneurs a way to protect their new business.
The proper business entity depends on what is needed for the individual entrepreneur. Some have significantly higher start-up costs, but provide more protection, depending on the success of the business. Others have relatively modest costs but do not offer the same levels of protection depending upon the assets that are owned.
What should I consider when choosing a business structure?
There are a few factors you should consider when determining which business structure is best for you. These factors include:
- Personal liability – Corporations and member managed limited liability corporations offer the most personal liability protections, allowing only the entity (not the business owner) to be sued.
- Taxes – While the business owner is liable for all taxes in a sole proprietorship, corporations may be subjected to double taxation on company profits.
- Industry – The type of industry your business belongs to will affect which structure you choose, as some industries are more high-risk.
Overall, it is important to consult with a business and commercial law attorney in Utah to help you determine would be the best course of action for your new start-up venture.