What type of business should I mark my business to operate as?
I’m almost done with my business plan. I’m stuck on something. I don’t know sould I operate my business as a Corporation or Sole Prietorship if I’m planning to run a photography and graphic designing business with employees I’m planning to hire which will include a secretary, assistant, graphic designer and a beautican. Please help I’m planning to open and start at the beginning to 2010.
June 24th, 2010 at 5:12 pm
Hi L Ant,
It’s an important question.
Do you have anyone else involved; a spouse? Have you defined an exit strategy? Is your investment from savings or outside sources?
What kinds of local tax or building incentives will you be taking advantage of? Other govt incentives?
A corporation offers some additional protections from some liabilities, but you will have to bring additional people into positions of ownership. Minor, perhaps, but it is certainly a consideration.
Talk to your accountant, and your attorney. Try to think of what might go wrong, and what advantage/disadvantage each form of ownership would provide. Then, try to estimate the risk involved.
Examine the differences in rates for your liability, worker’s comp insurance, see if those make a difference.
Good Luck!
June 24th, 2010 at 5:23 pm
First off, let me congratulate on your business venture. I’m so excited for you because of the strong passion I have for business and hopefully you will gain one to. I wish you the best of luck and I hope to quickly here from you about the success you are having with your company. From personal experience this will be a task you won’t regret, but at the same time please understand that it will be challenging.
Now to answer your question on if you should operate a business as a corporation or sole prietorship, you first need to understand the difference between a corporation and a sole prietorship. If you chose to go the sole prietorship option, than a question u need to be prepared to answer is are you willing to put up personal assets for the sake of your company. In other words, if things go wrong with your company are you willing to put up your house or car. Yes you will be able to gain all profits but if things go wrong you are the only one responsible for all aspects of the business as a sole prietorship. With a corporation you will have to pay more and higher taxes. On the other hand all debts will be divided amongst all owners. I personal would use the corporation option because it is less risky. Again I wish you the best of luck and hopefully I answered your question. If you have any other questions pertaining to business, than don’t hesistate to send me a email.
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