What entity should I form for my new business?
When forming a new business in South Carolina, business owners must first decide which entity is best for their business. The most common business entities in the state are sole proprietorships, limited liability companies (LLCs), and corporations. A sole proprietorship is the simplest business structure and requires the least amount of paperwork to set up. With a sole proprietorship, the individual business owner is completely responsible for all liabilities and obligations of the business. A limited liability company (LLC) is a hybrid structure that combines elements of both corporations and sole proprietorships. LLCs protect the company owners from personal liability for business debts and lawsuits, and can help ensure that personal assets are not at risk. LLCs require the filing of Articles of Organization and an Operating Agreement. The final common entity type is the corporation. A corporation is owned by shareholders and is managed by a board of directors. Corporations can raise capital by selling shares, and they offer business owners the greatest protection from personal liability. However, corporations require more paperwork, more fees, and more formalities compared to other business entities. When deciding on a business entity, business owners should carefully consider their goals, their available resources, and the type of business they plan to run. Consulting with an attorney and a tax advisor to discuss the pros and cons of each entity type can provide valuable guidance.
Related FAQs
How do I negotiate contracts with suppliers?What is a buy-sell agreement?
What is a business succession plan?
What is the process for obtaining a business loan?
How do I set up a non-profit organization?
What is an independent contractor agreement?
What is the difference between a corporation and a limited liability company (LLC)?
How do I set up a business website?
What is the corporate annual report?
What is a corporate policy manual?
Related Blog Posts
Understanding the Basics of Business Formation Law - July 31, 2023What You Need to Know Before Starting Your Business - August 7, 2023
The Financial and Legal Aspects of Starting a Business - August 14, 2023
Why It's Important to Have a Legal Guide When Forming Your Business - August 21, 2023
Navigating State and Federal Laws When Forming a Business - August 28, 2023