As an entrepreneur or business owner, it's important to have legal counsel from an attorney to guide you through the process of launching your business. One of the most important decisions you will make is choosing the right business structure. The type you choose will affect your taxes, liability, and how you run your company. Here are the primary types of structures to consider. 

What Are the Different Types of Business Structures?

1. Sole Proprietorship 

A sole proprietorship is the simplest and most common form of business ownership. It's a business owned and operated by one person, and there is no legal distinction between the owner and the business. As a sole proprietor, you have complete control over your business, but you are personally liable for all its debts and legal issues. If your business is sued or goes into debt, your personal assets, such as your home, car, and savings, are at risk. 

2. Partnership 

A partnership is a business owned and operated by two or more people. There are two main types of partnerships: general partnerships and limited partnerships. In a general partnership, all partners share equal responsibility and liability. In a limited partnership, there is at least one general partner who manages the business and is personally liable, and one or more limited partners who invest in the business but have limited liability. 

3. Limited Liability Company (LLC) 

A Limited Liability Company (LLC) is a hybrid business structure that combines the liability protection of a corporation with the tax benefits of a partnership. As an LLC owner, you are not personally liable for the company's debts and legal issues. Additionally, an LLC has a flexible management structure, and profits and losses can be allocated among the owners as they see fit. 

4. Corporation 

A corporation is a separate legal entity from its owners, meaning it can own property, enter into contracts, and sue or be sued. This makes having a trusted attorney crucial. There are two types of corporations: C corporations and S corporations. A C corporation is taxed separately from its owners and shareholders, while an S corporation is not taxed at the corporate level, and profits and losses are passed through to the shareholders. 

5. Nonprofit 

A nonprofit organization is a business formed for a charitable, educational, or religious purpose. Nonprofits are tax-exempt, meaning they don't pay federal income taxes on their earnings, and donations to nonprofits are tax-deductible for donors. Nonprofits must follow specific rules and regulations to maintain their tax-exempt status. 

No matter what type of business formation you choose, it's crucial to consult with an attorney to ensure you understand the legal implications of your decision and to help you with the process. If you're looking for reliable legal counsel, turn to Riley, Resar & Associates, P.L.L. in Lorain, OH. Their experienced team can guide you and help you make informed decisions for your endeavor. Contact them today at (440) 244-5214 to make an appointment or visit their website to learn more.