Business Structure

Simple and risky, or complicated and safe?

Thing's you'll learn:

  • The benefits and problems of being the only owner.
  • The benefits and problems of incorporating.
  • How to get your company formed.

Legally, you’ve got to make your business licensed to make money and pay people. Better yet, you’ll be able to pass on the company to someone important to you, or eventually sell the company. And maybe best, if things go down the wrong way, you’ll be protected from getting sued.

Sole proprietorship

An easy way to become a company is to fill out a form, start a business bank account, and make yourself the proud owner of a small business. You’ll have:

  • Total control over the business
  • You can sell it whenever you want,
  • And you don’t have to pay corporate taxes.

But owning it alone also means:

  • You are personally responsible for any business debts or company lawsuits involved in the business
  • if you want someone to invest in your company, it’s tough to sell them on sole proprietorship.
  • One lawsuit can clean out your personal bank account.

LLC (Limited Liability Corporation)

A better way to become a business is to start an LLC. With an LLC:

  • A debt collection or lawsuit only hits the business bank account and assets, not your own personal property. That means you can pick yourself up and start over again with your savingsor credit if anything happens.
  • You also can choose to be taxed at the personal or corporate rate.
  • You’ll still have control of the company, but some decisions are going to take more paperwork.

Employees and independent contractors

See our contract labor section to see how hiring independent contractors, rather than employees, impacts your business plans.

Get Started

We have found that LegalZoom is the easiest way to start a business. It costs $99 to start either the sole proprietorship or an LLC (you know which one we think is safer). When you start, you’ll wait a couple weeks and then receive your Tax ID number.

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