One of the most important decisions you will make is how to legally structure your business. There are advantages and disadvantages to each form of organization. There are four different ways to organize your business: sole proprietorship, partnership, the corporation, and the limited liability company. The Legal structure you choose will determine how much paperwork you will have to do, how much personal liability you will incur, how you will be able to raise money, and how your business will be taxed. The type of legal format you choose will depend on the following factors:
- Your need for capital
- Type of business
- When you want to start
- Your ability to finance
- The number of people involved
- The liabilities and risks you are willing to assume
- Personal tax situation
- Plan for taking money out of the business
The Internal Revenue Services (IRS) provides specific business tax information for each form legal structure.
«Steps to small business Start-up»-4th edition, 2000, Lynda Pinson and Jerry Jinnett
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