TOS 08: Who Get's a Piece of the Pie? Ownership and Entity Formation

When you are deciding what entity is best for your business, you must examine how ownership is distributed. As a general rule of thumb, if you are planning on having multiple owners an entity with limited liability protection would likely protect your business interest. This is especially true if one of the owners of the business is another business. A business with multiple owners also cannot be operated as a sole-proprietorship.

The closest structure to sole-proprietorship for multiple businesses is a general partnership, however, forming general partnerships are generally discouraged. They maybe simple to form, but their simplicity can often leave your business more vulnerable. With general partnerships, there is no limited liability protection (FYI: if you don't know anything about limited liability protection, check out the last couple of posts:). That means that your personal property could be on the line for the mistakes or actions of your partner.

If you are the only owner of the business, you could choose to operate as a sole-proprietorship, an LLC, or corporation; just keep in mind that certain type of corporation have immigration restrictions on who can be the owners. 

If you need a refresher on the basic differences between the different entity types, check out this previous post here.

Temi SiyanbadeComment