You have a great idea for a new product or service, and you can’t wait to turn your dream into a reality. But before you get carried away, you have to give your business some structure. Choosing the proper business structure, also known as a legal entity, is one of those foundational aspects of planning your business that can make or break your future success. Your choice will determines important aspects of your business, including your level of protection from personal liability (if any), how profits are taxed and how you can raise money, just to name a few. And with so many entities to choose from (e.g. S-Corp, C-Corp, limited liability corporation (LLC), Sole Proprietorship, Partnership), how do you go about deciding which one is best for you, your business and your expectations?
As Klickly founder and CEO Cooper Harris explains, it will depend not only on what kind of business you are launching, but your expectations for it as well. In her case, she decided to incorporate Klickly as a Delaware-based C-Corp, because the Delaware General Corporation Law is one of the most advanced and flexible corporation statutes in the United States. But just as all business are created equal, as Cooper explains further, one structure does not fit all. If you’re running a business with a social mission, you could opt for B-Corp recognition, or even skip the pursuit of profit entirely. You have a choice, and it pays to consider which one is right for you.
If you’re unsure what kind of entity you should choose, roll up your sleeves and dig in. Run to your favorite search engine. Find someone who’s already gone through the process, and get their opinion. A wealth of information is available, whether it’s at your fingertips online or over a cup of coffee. Look up businesses that are similar to your own, or businesses you aspire to be like, and see what kind of structure they have and why they chose it. When you choose the right entity, you’re laying the groundwork for your business to grow from for years to come. With your feet grounded in the right structure, the sky’s the limit.