What Type of Business Entity Should I Start?
Creating a business can be exciting and nerve wracking at the same time! Before you hang out your “open for business” sign, one of first things you need to decide is what type of business entity should you start. As we found out this week on The Successful Soulopreneur Radio Show sponsored by Starshine Communities there are pros and cons to each option.
Kim Dyer of Keystone Capital Management Group joined me on air with her guest attorney, Tracy Marsh. Our discussion reviewed the basic pros and cons of these 3 entity types:
Sole Proprietorship –
- Pros: Simple, Inexpensive, Complete control
- Cons: Absolutely No Liability Protection
- Owner responsible for all business’s debts, losses and liabilities.
- Business may become liable for personal debts. No shield.
- Pros: US Laws Uniform – Been around a long time, Liability Protection, Tax Flexibility
- Several steps to setting up
- Management – Forced management structure
- Business Formalities – In order to keep liability protection, you have to keep up with certain corporate formalities
LLC – Recommended most for business clients!
- Pros: Easy to set up, No annual filing requirements, Management Flexibility
- Manager Managed or Member Managed
- Liability Protection
- Tax Flexibility
- Less Paperwork
- Cons - Operate Business as Separate Entity – Separate account and financial records
Towards the end of the show, Kim shared that she has a startup checklist for all you budding entrepreneurs! To get your copy, click here to send an email to Kim. If you are thinking about starting a business in 2020, click here to listen in to this week’s podcast.
Securities offered through J.W. Cole Financial, Inc. Member FINRA/SIPC. Advisory services through J. W. Cole Advisors, Inc. (“JWCA”). Keystone Capital Management Group, LLC and JWC/JWCA are unaffiliated entities.