Season 7 – epiBLOG 12:
I hope you enjoyed your Labor Day weekend! Mine was great! I had a chance to spend time with family and friends and to unwind!
According to the US Department of Labor, we celebrate and honor the American worker on Labor Day. Whether that worker is an employee, a business owner, an independent contractor, or sales professional, all contribute to the “strength, prosperity, and well-being of our country.”
As business owners we are constantly focused on the best way to run our business and to get the results that we are aiming for. Part of setting ourselves up for success is determining which type of business entity (or structure) will work in our best interests.
Today’s topic is on choosing the right business structure for your type of business.
As always, discuss your specific business with a business law attorney and have a certified public accountant on standby as well. The more knowledgeable people you have available to you the better.
According to the Law Offices of Wesley Scott Jones, there are 4 types of business structures—Limited Liability Company (LLC), Sole proprietorship, Partnership, and Corporation.
This post will focus on the first two, as those tend to be what most solopreneurs and small business owners use.
Each has advantages and disadvantages depending on your business and situation.
I personally chose to have an LLC because when I created two in Arizona under the advice of my attorney, I had good experiences with both.
My writing agency The Infinite Writer Agency was started in the state of California. This is one of the most expensive places to have an LLC. Each state has different requirements, so please consult your business attorney if you need details specific to your business and state.
Nevertheless, California requires owners of LLCs to pay $800 a year in the form of a “business franchise tax” for the privilege of operating a business in the state of California. You have to pay this regardless of whether you make a profit or not.
Of course, California is a special case. Not each state requires expensive fees to operate.
What I enjoy about the LLC is the comfort in knowing that my personal assets are protected in case there is a law suit filed against my company. In a sole proprietorship, your personal assets can be in jeopardy should a client attempt to sue.
- LLC—a limited lability company can be owned by “individuals, trusts, other LLCs, and corporations.”
Advantages: taxed like a corporation and protects your assets in the event of a law suit because the company is separate from the individual.
Disadvantages: more paperwork to form, file, and to operate an LLC.
- Sole proprietorship–is an individual owner who runs the entire business. They may operate under their own name with “doing business as” (dba).
Advantages: all you need is your social security number, it’s very economical to start for a small business owner, and does not require as much government involvement and taxation as other business entities.
Disadvantages: “There is no distinction between the individual and the business. That can sometimes jeopardize the owner’s personal assets should the business go through financial problems. The same is true in the reverse, should the business owner experience hardships, such as divorce, illness, or some other personal difficulty, the business may be negatively affected.”
Today’s LESSON is to be research-oriented and consult a business law attorney to learn what is best for you and your business.
FUN ASSIGNMENT: Interview a variety of business owners who have different business entities to learn more about their experiences. Learn as much as possible.
Nitara Osbourne owns The Infinite Writer Agency, LLC, which provides content to producers, publishers, entrepreneurs, and sales people seeking help with developing their life stories into nonfiction books and movie scripts. Editing services are provided for clients as well. If you’re an accomplished sales or business professional, and are looking to tell your story, contact InfiniteWriterAgency@gmail.com.
United States Department of Labor. History of Labor Day. Retrieved 2 September 2019 from dol.gov.
Jones, Wesley S. (June 5, 2015). Four Major Business Formation Types. Retrieved from