Choose Your Legal Structure

Choose Your Legal Structure
When you start your business, it will be necessary for you to select its legal
structure. This chapter will help you to understand and make your decision by
introducing you to the definition, benefits, and risks of each of the following
legal entities.
�� Sole Proprietor
�� Partnership
�� S Corporation
�� Corporation
�� Limited Liability Company (LLC)
Will your business be a sole proprietorship, partnership, S corporation, corporation, or a limited
liability company? Before you make that decision, you should ask yourself a few basic questions
regarding the business and your own personal situation. Answering the questions on the next page
will help you to make an intelligent decision.

• What type of business will you start?
• How small (or large) will the business be?
• How many owners will there be?
• Who will be making decisions for company?
• Where (geographically) will you be doing business?
• Will you need capital from a lender or investor?
• What are the liability risks of the business?
• What kind of personal assets do you have?
• Will you need to protect those assets from the business?