There are many factors that contribute to the chances a business has of being successful. While viable business ideas and thorough market analysis are essential, choosing the right business structure can also be very important for the business' long-term success.
There are several business structures to choose from because different companies have differing needs. The main options that a new business has to choose from are corporations, sole proprietorships, limited liability companies (LLC) and partnerships.
Avoiding liability for business debts
If you are concerned about being held personally liable for business debts acquired over time, it is likely that you will want to create a corporation or an LLC. These will help you avoid have any claims made against you in a personal capacity.
Getting the best tax setup for your situation
The way that you will be taxed will depend on the type of business you have created. In general, corporations have the best tax benefits because any profits that are held within the company are not subject to tax. In addition, corporations tend to be taxed at a lower rate than sole proprietorships, for example.
When might a corporation setup be a bad idea?
Corporations help lower liability and lower taxes, and it is possible to sell stocks in addition. However, there are also many procedures that are accompanied by the management of corporations, and this can be costly in comparison to other business structures.
If you are planning to set up a new company in the state of Texas, an attorney can help you determine which type of business is best for you before making a commitment.