You may have dreamed of starting your own company for years before you were able to start making that dream a reality. From time to time, you may have thought about numerous things, such as whether you would have a brick-and-mortar establishment, what products or services you would offer and who would be your target audience. You may also have thought about choosing a business entity.
There are several types of business entities, such as sole proprietorship, partnership or a limited liability company. Choosing the one that best fits your needs and ultimate business goals will help your Indiana company achieve its full potential. Before choosing an entity, there are several important issues to consider. Each of these issues can help you determine which business structure is the best fit for your company.
Are you the only owner of your business, or are there co-owners?
If your business is owned by multiple people, and several of them are active in the business, you might want to choose a partnership entity rather than a sole proprietorship. In addition to ownership, it is also a good idea to consider possible liabilities that may be associated with your type of business. Some businesses are naturally at greater risk for liability than others.
For instance, if you are launching an online consulting business, the chances for someone filing a liability lawsuit against you would be much lower than if you are opening a restaurant in the heart of town. If you believe the chances of liability are high, then you may want the added protection of operating as a limited liability company. Finally, always consider the tax implications of your business when choosing an entity.
Changing business entities
It is possible to launch a business under a certain entity and later determine a need to switch. To do so, you would have to file a document known as “articles of organization.” You would also need to obtain a new tax ID number. If you are changing business structures, you might have to apply for a new license.
It is imperative to make sure that you are in full compliance of all state and federal business laws regarding choosing an entity and business operations. Certain business startup issues can be complex, and making errors could cause legal problems down the line. This is why it is best to consult with someone who is knowledgeable about business laws before you choose an entity and, certainly, before you make your products or services available to the public.