When you’re starting a business, one of the first steps is to choose the kind of business you want to have. That can be a little tricky, but by asking yourself a few questions, you’ll be closer to the answer.
Here are three questions you should ask yourself if you are considering setting up a corporation. They may help you decide if this structure is the right one based on your circumstances.
Do you want to protect your personal assets?
If you expect that what you do could ever lead to a lawsuit, then it may be a good idea to start a limited liability corporation (LLC). With an LLC, your personal assets are protected. For example, if you open an LLC in the food industry and someone falls ill because of your products, your personal assets will never be affected by their claims.
Are you looking for tax advantages?
If you’re investing a lot of money into your company and want to avoid taxes, having a corporation might be a good option. With an S corporation, for example, you can receive significant tax advantages and reduce overall taxes on profits and distributions.
Do you want to have or sell stock?
Finally, do you want to have or sell stock? If you want to be able to change ownership through stock ownership, then a corporation may be right for you.
Your attorney can help you learn more about the benefits and downsides to filing as a corporation, so you can decide if it’s the right business structure for you.