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Which business entity is right for you?

On Behalf of | Jun 15, 2022 | Business Law |

When you decide to start a new business, you need to think about what kind of business entity would be right for it. There are many different options, such as S-corps, corporations, LLCs and others.

In California, you’ll need to select a business entity before you can start working. The one you choose will determine the kinds of taxes you pay and if you can be held personally liable for any claims against your business or debts that may accrue.

It’s important to select a business entity that aligns with your goals. If you plan to work with a partner, having a partnership may be a good idea. For a freelancer working alone who wants a little more liability protection, an LLC may be the right choice.

How do you choose the right business entity?

Choosing the right business entity for your business requires you to decide how you want to be taxed, the level of liability you’re willing to take on, if you want to have employees and more.

For example, a sole proprietorship is the simplest entity to use. It’s just you. You pay personal and business taxes on the same tax return. You’re liable for debts or issues that happen.

An LLC, which is a popular option for many people, makes your business a separate entity. You’re better protected against liability in the case of accidents or bankruptcy, and you have a few additional tax options.

It’s important to go over each of the entities and to think about what they can do for you. It’s wise to have legal guidance with the documents you need to confirm your business structure.