Understanding entities and how they affect your business.
Selecting the proper entity for your business dictates many things, such as ownership, management and decision making, legal requirements, etc. Choosing the right business entity allows an entrepreneur to reduce liability exposure, minimize taxes, and ensure that the business can be financed and run efficiently. It also provides business owners with a mechanism for ensuring that the business operations will continue, rather than being automatically terminated, upon the death of an owner. Formalizing the business clarifies the ownership of all participants in the venture.
When choosing a business entity, there are important things to consider:
- How much you want to separate your business and personal affairs
- How to limit your tax exposure
- Whether or not you plan to pursue outside funding sources
- Operational costs to maintain your entity status
There are various types of entity structures that can be established for your business. To make the best decision, the experts at Corporate Service Center can explain the advantages and disadvantages of several factors that apply to your particular business. You should also keep in mind that there will inevitably be changes in the nature of your business over time, and these changes may make it more advantageous either to change your entity type or its tax classification.
If you would like more information about business formation,
contact us at 1-866-411-2002