Legal structure of your company is very important to shape up your career as a businessperson. Understandably, it takes a great deal of time and consideration to choose the best fitting structure for any business. The choice leaves a heavy impact on everything from taxes, liability to how you manage your company.

The most important point is to decide which structure will be most suitable to help you accomplish your personal, organizational and financial goals. The blog discusses the most important factors that you should consider while choosing a particular structure of your business.

Different Types of Business Organizations

  • Sole Proprietorship
  • Partnership
  • Limited Liability Company
  • Corporation
  • Cooperative

Important Factors to Consider

Sometimes, a business seems to fall into multiple categories. For the start-up owners, it is fairly difficult to choose a particular category. The owner should consider multiple factors including financial requirements, risk and potentials to grow. Remember that once you are done with the registration procedures for your business, it will be difficult to change the legal structure.


If operational complexities of a new business are taken into consideration, a sole proprietorship will be the best fitting structure. You need to register your name, start a business and pay taxes on reported profit margin. The hitch is you will have hiccups to receive outside funding. Compare it with partnership businesses that require the owners to have a signed agreement to state the roles, responsibilities and share of profits. LLCs and Corporations have different reporting requirements with both the Federal and state governments.


According to law, a corporation is required to bear the least amount of burden for personal liability. It implies that the customers and creditors are entitled to sue the corporation but are not given access to personal assets of the shareholders. An LLC provides the same protection with the tax benefits enjoyed by a sole proprietor. In any partnership business, liability is shared between the partners as per the partnership agreement.


It is important for any entrepreneur to reflect on where the company is heading to and if the structure allows it to attain the goal. Prepare your business plan to set your goals in keeping with the business structure. The structure should be wisely chosen so that it adds fuel to possibilities for continuous change and growth and never puts up any hurdle on its way to exploit its potentials.


The involved parties in a partnership business are entitled to claim their percentage in the profits. Your Clearwater Business Law accountant may recommend biannual or quarterly payment in advance to mitigate the ultimate effect on your return.

Capital Investment

If your business needs outside funding, it is better to set up a corporation that helps you receive fund easily if compared with a sole proprietorship. Corporations can secure additional funding, which they may require for further growth, by selling their shares of stock. On the other hand, the sole proprietors can receive funds via their personal credit or personal accounts.

Licenses & Permits

Legal registration apart, particular licenses and permits are also a must-have for you to operate your business. Depending on the structure of your business and others aspects, it may require a license at the Federal, state or local level.