The average business owner may find it difficult to distinguish between the different types of business entities and to determine which is right for your business model. The short answer is that there is no one-size-fits-all solution – each type of organization has its advantages and disadvantages. The decision should be made after reviewing the tradeoffs to determine what works best for your particular situation. Consulting various professionals, particularly your attorney and accountant, can give you information that can help you make the decision.
Once you have determined the entity, you should understand the process involved in forming the business type properly to comply with state laws and regulations. Each entity has its own legal requirements to fill and its own set of documents that must be executed. Even after the entity is formed, you may be required to maintain corporate records with annual meeting minutes or resolutions to record changes. It is important that you understand your responsibilities.
After you have formed the business, it is equally important to know what your duties and responsibilities are through the life of the business. You should also be aware of your rights as a business owner and what action you can take when those rights have been violated.
Written By:Tracy Jong