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Do you know what is the best structure for your new business?

Starting your own business can be an exciting process. However, it is important to make sure you are well-informed before you make any decisions because some of the most important decisions about your business are made early in the business formation process.

One such decision involves your business structure. There are several structures to choose from, and the choice you make can impact how much you will pay in taxes, how much paperwork you may need to complete, how you can raise money and how much personal liability you may face. Some of the most common structures include sole proprietorships, partnerships, corporations and limited liability companies (LLCs).

Sole proprietorships

A sole proprietorship would give you complete control over your business, and it is easy to set up. However, it does not separate your business assets and liabilities from your personal ones. This means that your personal assets could be at risk if your business faces bankruptcy or a lawsuit. Still, it can be a good choice for a low-risk business.


A partnership is a simple structure that allows two or more people to own a business together and share in the business’s profits and losses. In a limited partnership, one partner has unlimited liability, while the other partners have limited liability, and profits are passed through personal tax returns. In a limited liability partnership, every owner has a limited liability and will not be responsible for the other partners’ actions.


Corporation structures make a business into a separate legal entity, which can protect the founders from becoming personally liable for business responsibilities. Corporations can also raise money by selling stock. However, it can be more expensive to form a corporation, and corporation structures often require more extensive record-keeping. Also, in some situations your profits could be taxed twice.

Limited liability companies

An LLC combines some of the benefits of the partnership and corporation structures. With an LLC, you will typically be protected from personal liability. Also, profits and losses are passed through to your personal income without the business being taxed.

Each business structure has advantages, and the right structure for your business depends on your situation. It is important to make an informed decision about your business structure because it can have a lasting impact on you and the business you create.

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Hess & Jendro Law Office, P.A.
11070 183rd Circle NW
Suite A
Elk River, MN 55330

Phone: 763-200-6626
Fax: 763-274-1452
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