What type of business entity is right for me?

| Mar 11, 2021 | Business Law

If you’re considering starting a business in Georgia, you have many different options for setting it up. A business’s legal structure decides how it pays taxes and who is held liable for its liabilities. Before you make the decision, you should understand the different types of entities that are available to you.

Sole proprietorship

One of the most common and simplest forms of business entities is a sole proprietorship. This is where one person is solely responsible for all the company’s profits and losses. It’s important to realize that this type of entity does not offer any form of separation between your personal finances and your professional ones. Many people who start out creating their own business will use a sole proprietorship and then change to a different business entity later on.

Limited liability company

A limited liability company, also known as an LLC,, is becoming more common due to its separation of personal and professional debts. An LLC can have multiple owners that are referred to as members. The main benefit of using a limited liability company is that none of the owners are personally responsible for any of the business’s liabilities.

Corporation

One type of business entity that many people are familiar with is a corporation. A corporation is seen as a separate entity from its owners. There are different types of corporations that one can set up. These include C corporations, S corporations, B corporations, close corporations, open corporations and non-profit corporations. A corporation files its own taxes separate from its owners.

Setting up your own business may be a dream come true. While you might want to get started very quickly and not give much thought to the type of structure that you’ll be using, it’s important that you take some time to think it over. Each type of legal business structure has its pros and cons that you need to be aware of so that you can choose the right business entity for you.