The BizFilings blog covering business tips and trends.
Deciding on a Business Entity Classification
Published on Nov 30, 2010
Read 'Deciding on a Business Entity Classification' at 'Time to Start Up,' the small business blog by BizFilings.
Forming a company requires an idea, but once the idea is translated into a legitimate business entity of forming an LLC or incorporating a business, challenges arise and decisions need to be made.
According to the World Bank, the U.S. ranks eighth in the world for ease in registering a new business, behind Australia, New Zealand, Singapore and others, averaging a span of six steps and six days to become legitimate. China and Brazil, on the other hand, impose some of the most challenging bureaucratic obstacles to incorporating a business, with an average 37 and 120 day process in China and Brazil, respectively.
The U.S. business registration process is not the most efficient one, but it is certainly above average. Most entrepreneurs are intimidated by the process of choosing a business entity. Limited liability companies (LLC), corporations and S corporations are a few examples of business entities, but they all serve the basic function of protecting an individual proprietor or owner from legal or financial debts.
"The decision is more complicated than it may seem: What the government leaves in one pocket, it takes from another," writes Inc. magazine. "So sit down with a lawyer and accountant to weigh the options in light of your individual tax situation."