Legal Structures

When starting a new business, what legal structure should you use?

One of the most commonly asked questions when starting a new business is “What legal structure should I choose?”  In the United States, there are 4 basic legal structures

  • Sole Proprietorship
  • Partnership
  • Corporation
  • LLC has an excellent article on the differences between the main types of business structures.

Many small business owners start as a sole proprietorship to establish the business, then convert to an LLC or to a Corporation.

When we at B2B Solutions consult with a client we make a professional recommendation on several factors:

  • The owner(s)
  • The product or service being provided
  • Personal finances of the owner(s)
  • Potential for outside investors
  • Risk of liability

Deciding on a legal structure depends on many factors.   LLC’s and Corporations limit owners personal liability and may be recommended for businesses such as restaurants, product manufacturers, and some retail businesses.

Corporations may be recommended for some businesses where there are multiple partners, or when there are outside investors.

The information contained here is in no way meant to be interpreted as legal or tax advice.  We recommend consulting with an attorney and accountant for advice.  

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