{"id":20877,"date":"2016-04-19T17:22:01","date_gmt":"2016-04-19T21:22:01","guid":{"rendered":"https:\/\/www.wework.com\/creator\/?p=20877"},"modified":"2021-02-24T15:35:39","modified_gmt":"2021-02-24T20:35:39","slug":"starting-a-business-5-questions-to-ask-yourself","status":"publish","type":"post","link":"https:\/\/www.wework.com\/ideas\/professional-development\/starting-a-business-5-questions-to-ask-yourself","title":{"rendered":"Starting a business? Five questions to ask yourself first"},"content":{"rendered":"

When you\u2019re thinking about starting a\u00a0business, there are many options. It\u2019s all about making the best choice for your company based on your goals. There isn\u2019t one definitive option for you, but here are things to consider:<\/p>\n

1. Do you like the idea of making all the decisions yourself?<\/b> If the answer is yes, you may want to start a <\/span>sole proprietorship<\/b><\/a>, which means you are your own business. In this type of business, you are responsible for all the financial issues. This could be ugly when it\u2019s tax season or if there\u2019s a lawsuit against your business.<\/span><\/p>\n

2. Do you want to have partners but still be independent? <\/b>If your answer is yes, you may decide to form a <\/span>partnership<\/b>. This requires some sort of formal partnership agreement signed by everyone. It\u2019s a simple business structure that\u2019s easy to operate, and it allows you to raise money by selling partnership interests. But with general partnerships, there are still some measures to take to ensure the line between personal and business finances aren\u2019t blurred. The last thing you want is for your personal finances to be jeopardized because of business issues. This could lead to loss of partners and unforeseen liabilities.<\/span><\/p>\n

3. Do you prefer a partnership, but also want the option of looking for investors?<\/b> If your answer is yes, you\u2019re looking at a <\/span>limited partnership<\/b>. Unlike full partners, limited partners aren\u2019t embedded within a business. For founders, a limited partnership means the involvement of limited partners is minimal, and you are still entirely in control of your business.<\/span><\/p>\n

4. Do you want a more formalized legal structure that separates your personal assets from you company\u2019s debts? <\/b>Then your best option is to go with a <\/span>limited liability company<\/b>. With an LLC, there\u2019s an agreement that governs operations, so it\u2019s somewhat more rigid than an LP. LLCs don\u2019t have advisory boards or hold annual meetings. There\u2019s no limit to the number of members. Ownership can be split into different classes, which gives founders flexibility when it comes to raising equity financing. LLCs make sense if you\u2019re at the stage where you can attract angel investors who will be motivated by the potential tax losses.<\/span><\/p>\n

5. Do you have your sights set on venture capital?<\/b> If your answer is yes, a <\/span>C corporation\u00a0<\/b>makes sense for you. Venture capitalists are comfortable investing in this type of company. There are advantages to this entity outside of funding. You have a separation between debts, taxes, and legal structure from your personal assets.<\/span><\/p>\n

6. Do you want a company that can avoid taxation of corporate income? <\/b>Then an <\/span>S corporation<\/b> is for you. This is a good option for you if you are okay with limiting the number of shareholders who need liability protection. An S corp separates personal assets from your company\u2019s debts and offers tax benefits. S corps aren\u2019t so great if you\u2019re seeking venture capital since you\u2019re limited to one class of stock.<\/span><\/p>\n

Photo: Lauren Kallen<\/p>\n","protected":false},"excerpt":{"rendered":"

When you\u2019re thinking about starting a\u00a0business, there are many options. It\u2019s all about making the best choice for your company based on your goals. There isn\u2019t one definitive option for you, but here are things to consider: 1. Do you like the idea of making all the decisions yourself? If the answer is yes, you […]<\/p>\n","protected":false},"author":917,"featured_media":34768,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[43902],"tags":[],"class_list":["post-20877","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-professional-development"],"acf":[],"yoast_head":"\nStarting a business? Five questions to ask yourself first<\/title>\n<meta name=\"description\" content=\"Partnership? LLC? C Corporation? 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