Today we are going to be talking about how to launch a business for your Kingdom, and how to choose an entity type for that business. So first things first, what are the different options?
Sole proprietorship: A sole proprietorship could be right for you if you want to run a small-ish operation, with a few employees or contractors. For this type of business, you need to be comfortable making 100% of the business decisions.
+ there is no legal paperwork involved (apart from local licenses/permits)
- It can be hard to get financing since banks and investors see a sole proprietorship as a risky business entity.
Partnerships: If you or your industry thrive better in a creative and collaborative environment, a partnership might be the right type of business for you. Popular examples of partnerships include law firms, bars and restaurants, creative agencies, and family businesses.
+/- Partners equally share all costs, debts, and losses (except in limited partnerships)
C Corporation: This is the most common form of corporation in the U.S. It takes the liability off individuals, unlike partnerships and sole proprietorships, the C corp is its own legal entity. So, the corporation itself retains profits and incurs losses, and is taxed separately from its owners. You are not alone in a C Corporation, the business will have one or more owners, and the corporation supervised by shareholders, a board of directors, and management.
+ Liability protection for owners (you don’t need to worry about your personal assets being affected by debts, losses, or lawsuits against the company.)
- Establishing a corporation is complex and expensive with regulations on the state, federal, and local levels
Limited Liability Company (LLC): A limited liability company (LLC) is a hybrid business entity. They are also relatively easy to set up and give you flexibility when deciding how your companies structure will manifest. They can be a solo business or involve partners, investors, and shareholders.
+ Even if you are running your business solo an LLC is treated as a separate legal entity so you’re assets aren’t on the line if your business falls on hard times
- profits may be subject to self-employment taxes.
Remember the type of entity you choose will impact:
The size of your business and operations
How you’re taxed
Your share of profits
Your degree of ownership and accountability
Your legal liability
Funding options
So be sure to chat with a professional to make sure you have your bases covered and are choosing the best option for your goals. When I was going through this process, I found a service called Launch By Legal Shield. This program is all about starting up your business properly with the right structure, coaching, and advice to get you there at a very low cost.
To hear more about the tools needed, costs I ran into, and my experiences building a business for my
Kingdom check out the video below!
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