The Structure Matters: Choosing the Right One for Your Business

Nov 19

The choice of a corporate structure for a business has many consequences: a crucial impact on the business’s taxes, your ability to raise funds, the paperwork you must file, and perhaps most important, your personal liability.

Fortunately, you can change your mind and convert to another business structure later on, but as with all legal matters, it is not that simple; switching could have a few negative impacts. For example, your state may have restrictions about these changes, and there could be tax consequences, among other issues.

Business Structure Options and Considerations

State laws mainly regulate business structures, so there are minor variations on the nuts and bolts of the rules from state to state.

U.S. state governments identify more than a dozen different types of business entities, but business owners typically choose among these six: sole proprietorship, general partnership, limited partnership, limited liability company (LLC), C corporation, and S corporation.

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