Choose your business structure with the help of your CPA to save money.
(PRWEB) December 29, 2012
This year, millions of Americans became the proud owners of a new business startup, and next year millions more will take the plunge – but only some will succeed. And while there are many factors that determine new business startup success or failure, Sherry Tingley, founder of Coolchecks.net and principal writer of her popular small business tips and personal finance blog, says that choosing the right business organization structure is critically important.
“The legal structure you choose will determine how your business will be taxed and the rules your business must follow,” writes Tingley.
To help new business startups make the right choice, in her blog Tingley highlights the five most commonly used business organization structures:
1. Sole Proprietorship – suitable for those who don’t plan on having employees, and where there is no tax benefit to incorporating because of relatively low income. There is some added risk with this structure, since business debts can be attached to personal assets.
2. Partnerships – suitable when two or more parties want to do business together. All parties in a partnership have a legal fiduciary duty to put the needs of the business ahead of their personal aspirations, and partners have liability obligations that can be attached to their personal assets. Interestingly, partners are unable to sue each other for losses (provided that there was no breach of duty involved).
3. Limited partnerships – suitable for partners where there are both general and limited partners. General partners assume financial risk and act as the fiduciaries, while limited partners typically assume the role of raising capital and don’t participate in the day-to-day operations.
4. Corporations – suitable when owners and partners want to limit their personal liability, and create a vehicle or “entity” that can attract investments and own assets (e.g. property, equipment, cars, etc.). Corporations are owned by shareholders, and can be private or public.
5. Limited Liability Company – suitable for those who want zero liability with respect to company-owed debts. LLCs have the same tax status as general partnerships, and members of the company can participate in management (unlike members of a limited partnership).
Adds Tingley: “This information is intended to be used as a very brief overview of the main types of business structures. Consulting with a CPA or attorney can help you make the final decision about your new business. Protect yourself against unnecessary risks and get your new business off to a good start.”
Tingley’s full blog post entitled “Organizing Your New Business Startup” is available at http://www.coolchecks.net/blog/business-2/business-plans/organizing-your-new-business-start-up.html
For more information or media inquiries, contact Sherry Tingley at
sherry(at)coolchecks(dot)net or 801-599-0052.
Led by its Founder Sherry Tingley, Coolchecks.net offers a wide selection of business checks from several leading check printing companies. The company’s small business, personal finance and money management blog features a wide selection of practical articles, advice, insights and tools for small business owners and individuals. Learn more at http://www.coolchecks.net