Business|Career & Education

Choosing the Best Legal Structure for Your Business

There are many questions you need to ask when you are starting your own business. What will your business provide? Who will it cater to? How will it reach its customer base and become a success? These are just some of the many things you need to ask yourself when you are formulating your business and a business plan to get it started.

But there are more questions, ones that are more complicated and ultimately more important too. One of the biggest things you need to figure out is what legal structure your business will take when it is up and running. This is a pivotal choice, one that will decide the future of your business and the success it can have. There are many options, each with their own advantages and disadvantages. So, how do you decide which legal structure your business needs?

Before you decide which structure to accept, you need to know what they are. Your business can be a sole proprietorship, a partnership, a limited liability company (LLC), a corporation, or a cooperative. Now, which one should you pursue? Here is what you need to consider before the choice is made.

Complexity Of Your Business

How complicated and complex will your business be? If it is going to be massive and unruly, you should look into a corporation or LLC. Are you starting something simple and straightforward? Then a sole proprietorship is a good approach for you. You need to get a handle and grasp on the scope and size of your possible company before you decide how to legally structure it.


Taxes. Everything comes back to taxes. When you are setting up your company, you need to decide how you want it structured so you can decide how to do your taxes. Did you know that the owner of an LLC and sole proprietor keeps the money made in their business because it is all considered personal income? That’s good news but also bad because it will all be taxed accordingly. Figuring out how you are going to structure your business needs to incorporate how you want to be taxed.


When you are setting up your business, you need to consider where you are launching and running it. Depending on the jurisdiction you are set up in, you are going to be hit with an under the control of many different regulations. These regulations change depending on the city, state, county, and country you are in. Pay close attention and see what benefits or disadvantages you will run into based upon the local regulations. If the regulations, permits, licenses, and rules related to a certain legal structure is too much, then you just need to find a different route to take. The regulations might decide which legal structure you should follow.

Deciding upon the right legal structure for your business is one of the most important steps you take when you are creating your company. It dictates the future of your company and its success and can eliminate – or create – a lot of headaches. Pay close attention to the rules, the taxes, and the complexity revolving around your future business before you make a solid choice. The fate of your business depends on it.