If you’re thinking about starting a business, you’re probably wondering which business structure would suit you the best. Frankly, this is a very good question as the structure you choose would influence how successful you are in the future. Below, we’ll be helping you decide, so keep reading.
If you’re running a sole proprietorship, you won’t do as much paper work. You’re doing everything by yourself, so you won’t much permits too. And when it comes to taxes, it’s just you. So, you don’t have to worry about filling a multitude of forms. Of course, you’d still have to pay taxes, and charge things like GST- which you can calculate here.
Taxes You Have to Pay
If you want to stay away from the most taxes, incorporating your business is not a good idea. You’ll be running a huge legal entity so not only would the paperwork be immense; you’ll be charged a lot. The taxes you have to pay would be much more than other businesses. This is one of the many reasons people stay away from forming a corporation of any sort, be it S or C ones.
That being said, corporations have personal taxes charged separately from corporate taxes, which gives them tax breaks.
Your Legal Liability
You have to think about your legal liability. Unfortunately, sole proprietorships are the worst for this. Sole proprietors have legal liability for everything. This means if anything were to go wrong, they’ll have to pay for anything the company owes. This is a major headache that other structures don’t have to worry about.
Your Future Goals
If you’re an individual who has a very strong vision, you might have to stay away from a partnership. Your business partner would be a part of the process every step of the way so every decision would run through him, like you. This can cause a rift between the two of you as you don’t see eye-to-eye.
If you’re an adamant individual but still need a business partner, make sure it’s someone you’re close to as otherwise, you’re going to be in a very sticky situation.
Ease of Getting Capital
If you need capital, one of the easiest ways you can get this done is through selling shares. It’s easy, quick and extremely common as a range of businesses, small or big do this. That being said, not all businesses can sell stocks. It’s done by corporations only. So, keep this in mind.
Prevention of Double Taxation
Double taxation is the bane of all our existences. Businesses hate it and unfortunately, it happens quite often. You lose a lot of money to it, and the only way to completely get through double taxation is through S Corporations.
With the above points taken into consideration, it’s clear that a myriad of things has to be thought about before you decide on a business structure. Everything mentioned would help you make the best decision, but remember there’s more points that you should be aware of, but they’re not as important.
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