Using a business entity matching your goals is essential if you’re involved in a startup in New York or have an established small business. Forming an LLC, an LP or incorporating are a few options. Before making this decision, it’s best to weigh the pros and cons. This action helps ensure you pick an ideal choice for your business and its specific requirements.
Business formation with a new company
If you’re creating a startup, you may want to begin as a partnership or sole proprietor. Incorporating can be done later if it looks like it would be beneficial. Starting as a sole proprietor or partnership can provide the following:
- A custom approach
- More flexibility and less bureaucracy
Operating a partnership or running your business as a sole proprietor will likely offer more creativity. You can react faster and build custom, creative solutions when you don’t have corporate restrictions. Going this route also provides more flexibility. It can take longer to get approval for processes when you have to follow corporate regulations. However, this avenue can work well when consistency is essential and your business is thriving.
Incorporating with an established company
If you grow your business to a considerable size, incorporating may be highly beneficial due to its limited liability advantage. This choice eliminates a significant amount of risk. As a sole proprietor, your personal assets are on the line. When you incorporate, this risk gets transferred to the corporation.
Raising money can also be easier when you incorporate. Being established and growing is a plus for lenders who may give you a lower rate for a loan due to this factor. There is also a potential tax deferral when using this entity for your business structure.
Weighing the pros and cons of incorporating is critical when operating a business. This action helps ensure you’re making the correct decision.