What Factors Should You Consider When Choosing a Business Entity for Your DC Small Business?
Once you’ve decided to start a business, one of the most challenging next steps is to decide what type of business entity you should form. Most small business owners may consider immediately defaulting to a sole proprietorship since it’s the easiest type of business to form. However, don’t think that just because you are a small business you should only be looking at a sole proprietorship option.
What Business Entity Options are Available?
In addition to a sole proprietorship, you have the option of a partnership, LLC, or corporation. In some cases, your ownership structure is often the main dictating reason for choosing one entity structure over another. For example, if you are the sole owner, then a partnership structure would not be an option for you. However, it doesn’t preclude you from considering a single-member LLC.
When it comes to deciding what business entity structure is best for your new venture, it’s important to speak with a knowledgeable Washington DC small business lawyer who can advise you on the pros and cons of each of your preferred options. Some of the factors that people use when deciding on a business entity structure can include the following:
Level of Control
One important factor to consider is how much control you want to have over your business. If you want to be completely hands on and not have any employees or assistance, then that will be an important factor in what type of entity formation is right for you.
Concerns about Liability
Do you have concerns about your personal liability with this business? Do you have assets you want shielded from creditors and potential lawsuits? The type of business entity you choose will impact your potential legal liability. The need to protect your own assets and finances from risk with this venture is often when people opt for a more complicated entity type like a corporation.
Taxes are certainly one of the main driving factors in choosing one business entity structure over another. One of the drawbacks with a traditional corporation is the issue of “double taxation,” because you pay taxes at the corporate level and then again on your personal returns. Choosing an S-corporation or LLC can typically eliminate that issue; however not every business qualifies to become an S-corporation. This is something you would want to talk to your attorney about.
How Long Will This Business Exist?
Are you forming this business for a specific amount of time, and you plan to terminate it after a set interval? Or, do you foresee this business being passed down from generation to generation? Choosing the right legal structure is key because opting for the wrong one would mean the end of your business in the event something should happen to you or you pass away.
Contact a Washington DC Small Business Attorney Today
If you have questions on the costs and which business structure is right for your company, contact a Washington DC small business lawyer at Tobin O’Connor & Ewing today to schedule an initial consultation. Let us help you choose the legal entity that best suits your current and future needs.