So you’ve finally started the business of your dreams. You’ve picked out a name, a location for your store front, and maybe even a business motto. The next step in making things official is legally protecting your business. You can do this in 3 big ways:
Assign a legal entity to your business.
There are a couple different choices when deciding which entity best suits your business (Sole Proprietorship, Limited Partnership, LLC, Corporation, and an S Corporation), but, ultimately, the choice should be based on the specific needs of your individual business. Though there are a couple choices, the two most common entities typically chosen from are Corporations and LLCs. The main difference between the two is that an LLC allows losses to be “passed through” to the people involved in the company. This means that those involved in the company can claim losses on their personal tax returns. A Corporation, on the other hand, allows owners to share corporate profits with the corporation, lowering the overall tax rate. A Corporation can also have unlimited shareholders. Read more →