Does it make a difference how your business is organized?
It might make a great deal of difference. For some folks being a Sole Proprietor will work just fine, while for others it could lead to financial disaster. How does one decide? First of all you need to know the answer to some basic questions. Here we go:
- How much do you personally want to be responsible for business debts and liabilities?
- Which form of ownership will minimize the tax bill?
- What form will best help me achieve my short and long term goals?
- How much money have you borrowed on your business and where did it come from?
- What skills will the business need that you cannot provide?
- How much personal control do you want over day-to-day decisions?
- What will happen to the business if you are unable to manage it?
How you choose to answer these questions is the basis for deciding how to organize your firm.