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Important considerations when choosing a business structure

On Behalf of | Jun 20, 2022 | Business Formation & Planning

The structure of your new business is one of the most crucial decisions you will have to make. Your choice could affect its operations in the future, and you need to get everything right.

Whether it will be a solo venture, a partnership or a limited liability company, here are some things you should have at the back of your mind.

Ease of formation

The different business entities have varying requirements needed when setting up. Usually, it takes a shorter time to operationalize a solo business than a corporation in terms of the paperwork and licenses.


Do you want to be a separate entity from your business, or do you want to be personally responsible for your business liabilities? This is a critical decision since it could protect your personal assets if your business goes south and is declared insolvent.

Ability to raise capital

You will likely require funding from investors or financial institutions when you want to expand your business horizons. However, the structure of your business will determine how easy it will be to secure additional capital. For instance, it’s easier for a partnership or a corporation to raise equity than a sole proprietorship.

Control over the business

If you want to call the shots in your business, you need a business entity that allows you to do that. It may be harder to make quick decisions when other stakeholders are involved.

Making the right decision

The ideal business entity depends on several factors, including your objectives and the nature of your business. Each business structure has its risks and implications.

A careful analysis of what you intend to achieve and any long-term goals you may have is needed to ensure you make the right call.