It is easy to jump to conclusions when it comes to your idea of how to start a business. You may think that you must offer a great service or have a great product first and foremost, and then as you develop your company you figure out some of the logistical business matters later. This simply isn’t true. While it is nice to have a great product or service ready, it is more important to iron out all of the legal issues first. One of these issues is choosing your business structure.
Many companies begin as sole proprietorships. This is one of the most common forms of businesses structures. It simply requires that you start running your business. However, your business and you, the individual, are the same thing. You are liable for the company and you have to pay taxes on profits garnered from the company.
There are also partnerships and limited partnerships. This is where two or more people own a company, and for the latter it is as simple to set up as a sole proprietorship. Limited partnerships are more complicated and are often seen in the real estate business or with the film industry.
Limited liability companies and corporations provide more legal protection to the owners and individuals running the company. They shield people from the liabilities of the business.
These are just a few examples of the many business structures that are available to people creating or planning a business, so talk to an attorney if you have more questions.