What type of business structure do I need for my small business? LLC, sole proprietorship, S Corp, partnership, limited partnership? HELP! I’m running my business solo and I’m totally confused about how I should set it up for tax purposes. What are the advantages vs. disadvantages of each one?
I’m not a CPA or an attorney so I won’t pretend to be an expert here! I Googled some articles that explain business structure formation and the taxes associated to provide some clarity to your questions.
I can tell you off the bat though, that if you’re running your business solo, a partnership is probably out of the running for obvious reasons. *wink*
Like quizzes? Here’s one that’ll ask you some questions about your plans for your business, and then suggest a structure that would be a great fit: Entity Choice Wizard. Use this as just a starting point of course! Always get the pros involved when things get legal-y and technical and you don’t feel like you have a grasp on what’s going on.
Did you take the quiz?
Okay, now read these articles to get the full rundown:
- Choose a Business Structure
- Should You Form An LLC Or An S-Corp, And What’s The Difference?
- Small Business Basics: How S Corps and LLCs Pay Taxes
- Why Start an LLC? Limited Liability Company Advantages and Disadvantages
Now that you have a better feel for the lay of the land, I do recommend meeting with your CPA to help you choose the tax structure that is right for you and your business. You can also use online services like Legal Zoom or Rocket Lawyer to help choose and form your business structure since there are different guidelines and taxes associated with each structure.
It’s a fairly simple process, so don’t stress too much about it! Hope this helps.
Disclaimer: The advice given in this column is for educational, informational and entertainment purposes only. The reader is responsible for the outcomes of any actions and/or decisions made based on this advice.