When Should You Form A Business Identity?December 3, 2021
Plenty of budding business owners start with building their brand identity, but solidifying your business identity should be your first course of action since it influences all areas of your organization—from your services, values, reputation, goals, culture, branding, and anything that influences your customers to recognize your value in the market.
Seeing as your identity is the biggest contributor to your growth, what kind of business entity should your start-up embrace?
Exploring Different Structures to Build Your Legal Business Identity
1. Sole Proprietorship
One of the most straightforward routes for start-ups is choosing to lead your company as a sole proprietorship, which means you have full control over your business. While you can reap all the profits, it also means you are liable for any legal complications.
If you’re planning to spearhead your own business, then you can benefit from a sole proprietorship entity since it skips through the hassle of documenting or registering your company. But leading employees means you can be held liable for anything that turns south, in which case, it’s better to register as a different and more formal entity.
2. General Partnership
When two or more people lead your business, it’s best to go for a general partnership as your entity since it ensures all partners involved in the company can share the liabilities and responsibilities equally. Just be sure to clearly define your contract partnership agreement and its conditions!
3. Limited Liability Company
Combining partnership and corporation elements, an LLC is generally easier to manage than a corporation since it skips all the formalities. This entity treats the owners’ income as separate, so while it doesn’t go through taxation, your personal assets also don’t get as much protection.
Also known as a C-Corp, this is a legal entity befitting for businesses planning to go big. If you plan to invest in your own property, handle your own business bank accounts, and create contracts, it’s the right choice. Choosing to become a C-Corp is one of the biggest steps for start-ups, but the advantage is that all your personal assets are fully protected.
A C-Corp can also make a special election under the Internal Revenue Code to be taxed as a partnership. The S-Corp election allows the great C-Corp liability protections while getting the tax benefits of partnership taxation.
The Bottom Line: The Importance of Finding Your Business Identity
Aspiring entrepreneurs striving to establish themselves as a successful business often juggle different responsibilities, but one of the most defining steps that could push new ventures in the right direction is to start with the identity that would best suit their mission and statement.
With that in mind, your business identity would represent what makes your company unique and inform your audience about your value. It helps your consumers make more informed decisions involving your business, while you can better clarify your objectives moving forward.
Are You Looking for a Reliable Business Attorney in Pennsylvania?
Working with a business attorney in Pennsylvania should help you navigate and simplify your legal woes, so you can rest easy knowing you’re protected properly.
Unlike the traditional legal representation, Daley Zucker, LLC is fully committed to delivering the best representation and resolution for our clients in need of legal assistance. With years of experience and with a results-driven tenacity, our attorneys will strive to turn the tides in your favor if you contact us today at (717) 971-8719.