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Business formation involves choosing a business structure

On Behalf of | Jul 24, 2018 | Business Formation & Planning

Getting ready to start a business is an exciting time in any Florida resident’s life. Of course, taking this step requires much thought, and many decisions will need making. In particular, during the business formation process, individuals will need to determine what type of business structure they want to create and operate under.

The most common type of business structure is the sole proprietorship. This option is typically the easiest to form, but it does place all financial liability on the owner of the company, which could prove troublesome in the event of a lawsuit or other serious issue. Some individuals choose to enlist other individuals to create the company and form a partnership instead. This option allows for more than one individual to share in the profits and losses of the company, but like a sole proprietorship, partners are financially responsible.

If individuals would like options with less financial liability, they may want to consider creating a corporation or a limited liability company. With a corporation, the business becomes a separate entity from its owners, and that entity holds liability for various responsibilities. With an LLC, owners do not hold personal liability, but like a partnership, they do share in profits and losses that are not taxed on the business itself.

Choosing the right business structure will depend on many aspects of the company itself. Some individuals may see more advantages to certain types than others. If Florida residents are ready to learn more about this part of business formation, they may wish to consult with knowledgeable attorneys to gain more information.