When choosing a business ownership structure type, think about what you’re protecting, whether or not there will be other owners, whether you plan on getting investors or not and how you want the taxes to be paid. Most people consult with a lawyer and a tax professional before making a final decision on which entity is best.
One of the most important things you can do as an owner is to limit your personal liability for business debts and liabilities. This is what most entities start with—reducing your exposure. From there, you want to consider how the profits are distributed and thus taxed. If profits are passed through, that means that you add the profits to your personal tax return. This avoids double taxation, which can happen with a C-corporation.
However, if you plan on getting outside investment or plan on selling the company, a C-corporation is the…
