When starting a business, one logistic can loom large: deciding the legal structure for your business. Whether you’re launching a startup, own a small business, or have a side hustle, establishing a formal entity is important. We understand that startup law can be confusing, so we’re here to help break it down.
The legal shield that both Limited Liability Companies (LLCs) and corporations offer can’t be understated. It’s a safeguard that can make or break your financial security, and amidst the maze of legal jargon, LLCs and corporations stand out as beacons of asset protection. Investing in a startup attorney to help guide you in this process is ideal, but this article is also a great resource to help give you an understanding of LLCs and corporations, establish what makes them different, and determine which one is best for your business needs.
In this era of digitization, both LLCs and corporations are easy to establish. The online filing option for both makes the administrative process hassle-free, which allows you to focus on your core business operations. Additionally, these structures act as a barricade between your personal assets and any potential liabilities arising from your business activities.
While there are commonalities of LLCs and corporations, the key difference that sets them apart can’t be overlooked. LLCs are shaped around the concept of “Limited Liability.” These entities are owned by members – individuals or groups that collectively steer the company’s course. This makes LLCs ideal for an individual or a couple of people that want to get together to start a business.
On the flip side, corporations introduce a different dynamic through the introduction of shares and shareholders. This structure is tailored for those who aspire to share their operations through external investments. If your vision includes selling shares of your company or inviting external stakeholders to help your company scale, a corporation is the choice for you. A lawyer who helps entrepreneurs with startup legal services can help you sort this out.
So, how do you decide which one is right for your business? It all comes down to the nature of your business and your goals. If you’re an individual or a small group of people venturing into business, an LLC is the clear move. Its simplicity and the protection it offers is a winning combination. On the other hand, if you have dreams of taking your business public, getting investors, and trading shares, a corporation is the best fit. A corporation offers the framework to make your dreams of expanding a reality.
As you launch your business, remember that the choices you make at the onset have a lasting impact. The legal structure you choose is more than just a formality – it defines the trajectory of your startup.
You will face many choices as you navigate business ownership, but luckily, you don’t have to do it all on your own. An experienced startup lawyer can help guide business owners and startups just like you towards success. Feel free to give us a call or send us a message to get started.
