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There are many business types: Which one is best for you?

| May 25, 2021 | Business |

It depends.

If you are a regular reader of business law articles and reports, you might have guessed that a less-than-absolute answer like the above response would feature concerning a query about business entity selection.

Here is why: It is truly the case that a decision regarding a business structure to be launched must first factor in the type of entity involved, future goals, personal preferences of owners and perhaps myriad other considerations.

And there is this too: There are ample possibilities to choose from.

“Knowledge is a critical asset” for any business principal or commercial team pondering entity choice, duly notes one proven New York legal source addressing entity options. That overview highlights several key formation structures, including these long-established American business models:

  • Sole proprietorships (often optimal for a single owner and small business, offering simplicity and “pass-through taxation” that eliminates specifically paid corporate income tax)
  • General and limited partnerships (the former having attributes similar to a sole proprietorship, with multiple principals sharing business liability; the latter having no liability or management prerogatives for limited partners)
  • Limited liability companies (LLC partners are materially shielded from liability for debts and other claims)
  • Corporations (independent entity with separate existence from owners/shareholders; no personal liability for latter, heightened ability to raise capital)

The above bullet points serve as mere overview sketches of common business structures. Unique pros and cons link with each entity.

Questions or concerns regarding business formation/structure can be directed to an established business law legal team with a proven record of advocacy on behalf of diverse commercial clients.