Small business company structure

The type of company structure a business chooses is important when the company needs a small business loan.   Many business owners start with a sole proprietorship, incorporating later.   Retain all business licenses, business checking account statements and tax return information since the inception of the business to prove time in business, which will be important for the business over time.

Incorporating immediately is typically a better choice because the business will be listed prominently on the secretary of state records.    By incorporating immediately, any other entity your company deals with will have an easy, fast way to see your full time in business with the state records.   Time in business is one of the key factors when business credit is evaluated.

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The main issue often cited by business owners when it comes to which type of business structure to choose is liability.   The officers of the business do not want to have personal liability for any issues related to the company.   If the business gets involved in legal issues, bankruptcy issues, civil or criminal issues involving the operation of the business, the owners want the maximum separation to protect them.

This is best accomplished through either the S-Corp, C-Corp of LLC company structure format.    If the business is small, the S-Corp may be the best choice for businesses with less than 35 Employees.   If the business is a single member,  then the LLC, Limited Liability Corporation may be the best choice when setting up the business structure.   If the owners chooses a Sole Proprietorship or Partnership, they leave themselves open to litigation or debt collection problems.

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