Congratulations! Your business idea is ready to become a reality! Your first step is to decide what type of business structure is best for your specific and unique business. This is one of the most important decisions you can make, and the experienced business law attorneys at Coepio Legal can help you make one that sets your business up for future success. Learn more about possible business structures and which one might be right for you and your business here.

Why Business Structure Matters

The legal structure you choose for your business impacts everything, including what you pay in taxes, whether you can be held personally liable, what paperwork you need to file, and how your day-to-day operations will function. Before you register your business, get your licenses, and get assigned your tax ID number, you need to determine what kind of corporate structure will work best for your business. This decision will affect the rest of your business moving forward and through its eventual growth.

Common Business Structures

While the decision is yours regarding what type of business structure will work best for you, consulting with an experienced business attorney can help you understand how your unique business could benefit from different structures legally. Some common types of business structures available are as follows:

• Sole Proprietorship: This business structure is one of the simplest to form, however it may be more difficult to obtain a loan from a bank, and you can be held personally liable for any debts of the business. If you are just starting out and want to test your business idea, this may be a good choice.
• Partnership: This business structure is one of the simplest to form for more than one person. Important legal decisions still need to be made regarding whether to choose a limited partnership or a limited liability partnership. The decision between the two affects business owners’ rights, how they are taxed, and how the business operates.
• Limited Liability Company: Also known as an LLC, this hybrid business model affords you protection against personal liability. While both profits and losses can be passed to your personal income, owners of an LLC are legally considered self-employed, and there are specific taxes that address this type of business structure.
• C Corporation: This business structure separates the business from the owners. This allows strong protection to an owner from personal liability. However, the cost to form a C Corporation is higher than other business structures. Additional reporting requirements exist for C Corporations and they may issue corporate stock. This structure is for a more advanced, large, or already established business.
• S Corporation: This type of corporation avoids double taxation of a C corporation, however, some profits and losses pass to the owner personally without being subject to the corporate tax rates. You must file with the IRS to obtain an S Corporation status, which is different than registering with the state.

Other business structures are B Corporations, Close Corporations, Cooperatives, or even combining different business structures.

As you can see, establishing a business and deciding on the correct business structure is complicated. After a decision is made regarding which business structure is best for your business entity, there are still numerous legal filings, contracts, and tax decisions that need to be addressed.

Contact an Experienced Small Business Attorney

We are excited that you are starting a business! Now is the time to determine which business structure your business will have,and navigate some complex legal issues. Visiting with an experienced business law attorney can help you understand your choices moving forward. Coepio Legal specializes in business legal advice and contracts for business owners in San Francisco. We would welcome the opportunity to visit with you regarding your business. Call our office at 415-323-6212 for a free consultation today.