When was the last time you stopped to consider the legal structure of your company? Although it may seem like a small detail, having the right corporate structure for your type of business can make a major difference, both legally and in your day-to-day operations. The appropriate business structure can help protect your company against liability issues, bolster your finances, support your partnership with other entrepreneurs in some cases and more. If you’re not sure whether your company is currently structured properly, here’s what you need to know.
Consult Your Lawyer About the Best Legal Structure for Your Business
If you’re inexperienced in helming a company and want to make sure to avoid legal problems, it may be best to consult a lawyer about the best path forward for your company. There is no one-size-fits-all when it comes to the right structuring approach, but there are some structures that may be well suited to many types of businesses. Be sure to consider the pros and cons of all your options before settling on one in the end. Some of your top choices may include:
- A limited liability corporation, or LLC
- A sole proprietorship
- A partnership
Debate Whether You Need the Protections of an LLC
One of the most common business structures, known as the limited liability corporation, or LLC, may or may not be the right choice for your business. LLCs are particularly helpful when your company needs or could benefit from specific types of legal protections. Before settling on an LLC, ask yourself if your company could use:
- Protections against personal liability for company debts
- Legal protections in the event of certain lawsuits
- Possibilities to purchase stock or commercial properties
Consider Whether a Partnership or Sole Proprietorship Would Be Best
Another major decision to make when deciding how to structure your company is choosing whether to go it alone or whether to helm the company with a trusted partner. Both partnerships and sole proprietorships have their pros and cons. The choice may ultimately come down to your preference for:
- Holding dual status with a business partner
- Sharing liability for debts and funding
- Having a partner to brainstorm and build with
Regardless of the type of services and products you may offer consumers, having the right corporate structure in place for your business can make all the difference on a number of fronts. Your business structure could help shield your company from certain liability issues, help support your business partnership, allow you to purchase stock and more. In order to identify the type of structure your company should ideally have, try working through these key steps.
