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
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!