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Choosing A Business Structure

Updated: Jul 15, 2021

Choosing a business structure for your company is one of the most crucial first steps to starting a business. Your business entity type has legal, financial, and administrative implications, so it’s important you get started with the best entity for your situation.

How Can Your Business Structure Affect You?

Your choice of business structure will have an impact on these and other aspects of running your company:

  • Who qualifies to own your company

  • Whether you can—and what you must do to–transfer ownership of your company

  • Taxes your company is subject to

  • Your ability to get credit and funding

  • Your personal liability

  • The number of ongoing compliance requirements you need to satisfy

What Should You Consider When Choosing Your Business Structure?

Some of the factors that will influence which business entity type you select include:

  • Where you plan to conduct your business

  • Wanting to have limited personal liability for your business activities

  • Whether you will have a partner or an investor

  • Your expected earnings and deductions

  • Desire to minimize your self-employment tax obligation

  • Your business goals

  • Your tolerance for compliance formalities

  • Registration and administrative costs to set up and maintain a business structure

Before selecting, a business structure, you should talk with your accountant and attorney to determine which will best serve your needs.

Then you would utilize the attorney, accountant, or registering agent to register your business.

Click the file to see the most common business structure types.

Popular Business Structures
Download PDF • 77KB

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