Incorporating is generally one of the best things a business can do to set itself up for success. However, entrepreneurs new to the process might feel overwhelmed by the options when it comes to business structure.
Should you form a corporation or an S corporation? What’s the difference between a corporation and an S corp, anyway? Are there other, lesser-known entities that might be a better fit for your company? Do some entities need to meet certain qualifications before incorporating a business? These questions ultimately lead to even more questions, as you ask yourself which entity is the best fit for your business, the industry you’re in, and where you operate from.
Ready to thoroughly understand entity formations? Let’s take a look at five entities that could be a great fit for your business to incorporate as.
Limited Liability Company (LLC)
What does this entity do?
Forming an limited liability company (LLC) provides small businesses with liability protection. This kind of protection ensures that personal and professional assets are kept separate.
Why does that separation matter? In the event of an unforeseen circumstance, like a sudden lawsuit that could hold the owner responsible, your business would be designated as a separate, legal entity since its owner formed an LLC. This keeps the owner’s personal assets, like homes and cars, from being impacted.