Choosing a Form of Organization for Your New Business
Whether you've purchased an existing business or started one from scratch, you must decide which form of organization (sometimes referred to as 'business entity') is best for your company.
After deciding that you're going to start your own business, your next step should be to begin planning the most basic organizational aspects of your business. These choices can be vital to the success of your business.
Naming your business. First, what are you going to name your business. You need a name that is unique, or whoever started using it before you will be very unhappy with you. The name must convey what your business is and does. There's not much doubt about what you're going to get at "Joe's Garage" or "Momma O'Rourke's Family Irish Restaurant". For more information, see naming your business.
Organizing your business. Second, you have to choose a form of organization. This decision dictates what organizational formalities must be followed, how income is reported, and numerous other issues. Research the issue carefully before making a decision. Don't forget that this decision can and should be revisited as your business circumstances change.
There are several choices among entity types, and each has its advantages and disadvantages. Make sure that you consult with your attorney or accountant before making a final decision.
Choose one of the following:
Remember, the form that you choose isn't permanent. If the circumstances of your business change, you can always change the form of your business. For example, you may start your business as a sole proprietorship, but as your business grows, you may take on a partner and become a partnership. Or, you may choose to incorporate to protect business creditors from pursuing your personal assets.
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