What factors go into the Choice of Entity?
Every single fact concerning your business is relevant to the Choice of Entity decision. Not all of them are of equal importance, but they all matter to some degree.
For almost all start-up companies, the considerations that should be in the forefront are not the sale of ownership interests to the public or venture capital financing--these things come later (hopefully!). Instead, the initial focus should be on:
•the tax and tort liability issues,
•cost of maintenance of the entity,
•protection of intellectual property (very important and often overlooked),
•size and complexity of the entity,
•regulatory requirements that the local, state or federal government has placed on the proposed business activity,
•and other similarly mundane issues.
These are much more relevant to a young business, albeit less exciting than "going public" or getting venture capital money. Still, success depends upon them. Please pay attention to your choice of entity at some point, it really does make a very large difference later on.
Here is a list of standard business entities. Each one is a link to some basic information about the particular entity.
1.C-Corp
2.Limited Partnerships and Partnerships
3.Sole Proprietorship
4.S-Corporation
5.Limited Liability Companies
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