Prospective Georgia entrepreneurs who are thinking about starting a business will need to consider what type of structure it should take. Factors that will likely influence that decision include a desire to limit liability or whether there are multiple founders. Other factors could include where a founder lives or the cost of setting up a business as a limited liability company or a corporation.
The sole proprietorship is one of the easiest types of companies to operate. Income and expenses are reported on a Schedule C, and all income is subject to a 15.3% self-employment tax. Those who have partners or who are looking to legitimize their business as quickly as possible may want to consider using another structure. The same may also be true for those who are looking to limit their personal liability.
Companies that have rental property can benefit from starting an LLC. Furthermore, partnership agreements may be easier to define and codify through the LLC structure. The corporate structure may be best for companies that want to issue shares or borrow money in its name. An S corporation is typically a better option for companies that have few shareholders or are still growing. It is possible to form an LLC and have it treated like an S corporation for tax purposes.
Starting a business may involve many variables that new owners may or may not know to account for. Therefore, it can be a good idea to work with a business law attorney. This individual may be able to help create operating agreements or fill out paperwork required by the state or federal government. Complying with regulations may avoid fines or other penalties that could harm a business in its infancy.