If you are considering starting your own business, you may feel overwhelmed by the legality of how to structure a startup. Deciding what business structure is best suited to your unique business needs can be a complex legal process. Making the right decision will lay an important foundation upon which your business will be built. 

Importance of Business Structure

One of the most important decisions you will make as a business owner is how you will structure your business. This company business structure will impact your taxes, to the liability you have as an owner, to the type of paperwork necessary, as well as daily operations. Before you decide to register your business and obtain a tax ID number, you first need to determine what kind of business structure your company will adopt. 

Business Structures

You have several different options when it comes to business structures. Many of these decisions will be largely depending on what your business goals are both now and for your future. Consulting with an experienced business attorney can help you make the best decision for your particular and unique needs. Some of the types of business structures you may choose include the following: 

  • Sole Proprietorship 

  • Partnership 

  • Limited Liability Company (LLC)

  • C Corporation 

  • S Corporation 

  • B Corporation 

  • Close Corporation

  • Cooperative

  • Combination of Business Structures

Within these different types of structures rest even more choices. For example, a limited liability company may be either single-member owned or owned by multiple persons. An LLC may also be established either as an S corporation or not. Again, the choices are vast, and visiting with an experienced attorney can help you make the best decision for your specific business needs. 

Common Types of Business Structures 

While there are a lot of business structures listed above, most companies tend to choose between an LLC, S Corporation or C Corporation. Therefore, a simple overview of those business structures is provided below. 

  • Limited Liability Company – An LLC may be established as a single owner, or with multiple owners. Either way, creating an LLC allows you personal protection from liability. While profits and losses are passed on to you personally and will affect your taxes, you will also receive tax benefits due to the establishment of a separate legal business entity. 

  • S Corporation – This type of business structure is slightly more formalized and legally complex than an LLC. An S Corporation tends to walk the line between a formal C Corporation and a smaller LLC. An S Corporation will allow the owners to avoid any possibility of double taxation that may exist through a C corporation, however, the S Corporation’s profits and losses will still pass through to the owner personally. 

  • C Corporation – This more formal business structure completely separates all finances between the business and its owners. For larger businesses, this structure can prove extremely valuable. 

First Key Positions Needed 

As you prepare to decide what type of legal structure you want to create as the basis of your company, you will also need to consider what key positions and roles you will need immediately filled as you begin your startup business. While every company is different, and whether you sell goods or services will impact these decisions, some of the important jobs that will need to be handled include the following: 

  • Operations – If you are a small sole proprietor, many if not all of these jobs may fall to you. However, one of the most important jobs is that of operations manager. This person will handle the management of employees, business filings, business relationships, communications, day to day operations, accounting, billing, and all finances. 

  • Marketing – If you have a new good or service, you will need someone to market your company on your behalf. You can hire this position out to a company, or hire someone in-house. Either way, you will likely need someone to spread the word about your amazing new company through email marketing, website design, social media and search engine marketing, event marketing and all areas of branding and public relations. 

  • Sales – Just as you need someone to market your new business, and gain awareness of your brand, you will need a salesperson to actually sell your product or service. This person will hunt down prospects, handle sales calls, set up systems to gain more sales, and close deals to make your company profitable. 

  • Writer – While you need someone to do your marketing, you will likely need someone to write the content that the marketer uses to promote your company. Oftentimes, this person may offer both services. However, in some cases, they do not, and you will need to hire someone who has an excellent ability to write technically, as well as match your branding and business style throughout your content. 

  • Product Manager – If you are selling any type of product, you will likely need a product manager at some point. This person may actually develop and create your products and eventually perfect them to the point they can be sold. Product managers typically find opportunities or gaps in the marketplace and find solutions and products for your company to sell to fill those gaps. 

Again, if you are a small start-up company, you may be wearing many hats, and handling many of these roles. However, as your business grows, so will your need for extra help. Understanding the key roles you will need to fill first can help you create a realistic trajectory of your business. 

 

Contact an Experienced Business Attorney to Find Out How to Structure a Startup

If you are considering starting a company, there are dozens of decisions that need to be made from how to structure your startup, to how you will logistically run and operate your business immediately after you open. It is nearly impossible as a new business owner to attempt to determine every possible advantage and detriment to the legal decisions that are available to you. Contacting an experienced business attorney can be invaluable as you begin the process of starting your new business. As an attorney practicing for over 15 years, as well as the owner of several successful local retail businesses, Itai Klein can help clients with all of their startup business needs. Contact the experienced startup attorneys at Klein Law at (310) 295-2261 or fill out our online form today.