It is vitally important that entrepreneurs select the correct form of legal structure. Whether a new business or an existing operation, the legal form will determine to a great extent the way in which business is conducted, not to mention tax affairs.
It will also affect the degree of freedom to operate within the total business environment. Selecting the most appropriate form of legal organization is easier said than done. Many aspects must be examined, taking into account both personal and business considerations.
There are seven kinds of legal structure in general use today. They are as –
- sole proprietorship,
- general partnership,
- limited partnership,
- subchapter S corporation,
- limited liability company,
- and business trust.
Each has unique characteristics with specific advantages and disadvantages that need to be evaluated. The form which best suits you and your business needs should be selected.
I will publish more articles ahead explaining each of the legal forms in my upcoming post.