There are many factors to consider when starting a business. Such factors can include equipment selection, cost estimations and market research. While those are important, the operational structure can be one of the most significant indicators of a business’s long-term success. That’s because they can come with legal, financial and functional implications.
Fitting the business’s needs
When choosing a structure, these are some things for owners to consider:
- What industry it operates in: As Western Pennsylvania’s economy is diverse, different sectors rely on different structures to function successfully. For example, manufacturing can be a high-risk industry, so many manufacturing owners may choose to be a Limited Liability Corporation, as it can give them more protection.
- How owners want to pay taxes: The business model one chooses can determine what taxes they pay. If someone wants to establish a small business startup, a sole proprietorship can be a viable option. However, those who set up a sole proprietorship get taxed at the individual level, as neither the state nor federal government regulates this model. If owners want their personal and business earnings to remain separate, they may want to look into a partnership or LLC.
- Each model’s level of liability: When choosing a business structure, owners should understand what protections each type offers. In LLCs and partnerships, the businesses are the ones who are liable, not the individual. In a sole proprietorship, owners are personally responsible for the performance of their business.
It can be difficult to decide
Choosing a business model that works best can be stressful, challenging and time-consuming. Those looking to make such decisions may want to seek legal counsel. An experienced and detail-oriented business formation attorney can address any concerns or questions owners may have.