Safeguard your business and IP with a trusted legal partner.
Photo of Ronald J. Tong

Why your new company’s formation structure matters

On Behalf of | Feb 24, 2023 | Business Litigation

If you are starting to take steps to launch a new company, congratulations! Whether your operation will be a single-owner business that caters exclusively to local clientele or a multi-national corporation with a global customer base, the hard work you’re putting in to realize your vision should be applauded.

To better ensure that your hard work pays off in the form of an enterprise that is both profitable and sustainable, you’ll need to choose the company formation structure that will best facilitate your vision. You may need to take a two-pronged approach to the business formation process by “starting small” and then converting your business structure once your operations become self-sufficient. But even in this instance, the structure you choose to start will influence your company’s development from go. 

Weighing your options

There are potential advantages and disadvantages to each of the primary legal structures available to businesses across the U.S. Some states offer some hybrid options – especially for partnerships – but the four structures introduced below are available everywhere. Each model is well suited for different kinds of businesses, so you’ll want to weigh your options with your specific vision in mind. Your options include:

The option that you choose will determine how your business is taxed, whether you’ll have to submit regular reporting to the state, whether you’ll enjoy personal liability protection in the event that your business is sued or cannot meet its debts, whether you’ll be required to honor a specific managerial structure and a host of other consequential realities. 

Because legal business formation is such a consequential process, you will not want to approach it lightly. If you’re unsure of which option might work best for your new business, don’t hesitate to seek personalized feedback from a legal professional who regularly handles business formation matters.