This is a living resource, and new sections will be added as they are completed. Be sure to check back for updates on important topics like intellectual property, employment, capital raising, and planning for future transitions.
Organizational Beginning Matters
Starting a business begins with key decisions about structure and setup. This section covers essentials like choosing an entity type, understanding costs, and maintaining compliance, giving you the foundation to build and grow your business confidently.
1. Do I need to form an entity for my business?
Yes. Forming a legal entity can protect your personal assets from business obligations, provided you maintain it properly (see Question 6). Additionally, an entity creates a separate structure for building value, which can help in raising capital and preparing for a future sale.
2. When should I form an entity?
You should form your entity as early as possible to begin benefiting from the protections and opportunities it provides (see Question 1).
3. Which entity type is right for me?
The best entity type depends on several factors, such as tax and accounting considerations, governance complexity, and your capital needs and sources.
3.1. What are the pros and cons of a corporation?
Pros:
- Limited personal liability.
- Familiarity to investors.
- Potential tax advantages.
- Ease of transferring ownership.
- Perpetual existence.
- Clear governance rights and obligations.
Cons:
- Potential for double taxation.
- Costs and complexity of formation and maintenance.
- Fiduciary and legal obligations.
- Possible loss of control.