Which business structure is right for your new company?

On Behalf of | May 21, 2024 | BUSINESS & COMMERCIAL LAW - Business Formation & Planning

Choosing the right business structure for your new company is a consequential decision-making process. What you ultimately decide will impact your taxes, liability and overall management opportunities. As a result, it’s very important to carefully assess all of your options before committing to an approach. 

Although many states offer some hybrid structural options, the primary four that you’ll have to choose from are sole proprietorships, partnerships, limited liability companies and corporations. Each of these structures suits certain entrepreneurial visions particularly well. 

Sole Proprietorship

A sole proprietorship is the least complex business structure available. It’s easy to set up and gives you complete control over your business. However, there’s no legal separation between you and the business, meaning you may be held personally liable for all debts and obligations. This structure works best for small, low-risk businesses run by solo entrepreneurs.


A partnership is a business owned by two or more people and/or entities. Like sole proprietors, partners enjoy management flexibility and ease of setup. But, also like sole proprietors, partners may be held liable for the business’s obligations, which can be a significant risk.

Limited Liability Company (LLC)

An LLC combines the benefits of a corporation with those of a partnership or sole proprietorship. It protects your personal assets from business liabilities, offering limited liability protection. LLCs are flexible in terms of management and profit distribution, and they offer the option of pass-through or corporate taxation arrangements. An LLC is a good choice for those who want to limit their risk of business-related liability overall, regardless of whether they’re going into business for themselves or alongside other stakeholders. 


Corporations are more complex structures that are separate legal entities from their owners. They provide the strongest protection from personal liability but come with more regulations and higher costs. Corporations are suitable for businesses looking to raise capital, go public and those that have complex ownership structures.

It is worth restating that each structure serves the needs of different visions particularly well. Seeking personalized guidance before committing to any of these options is, therefore, wise.