Choosing a Business Structure in Virginia

One of the most important decisions you'll make when starting a business is choosing the legal structure for your company.



Your structure can affect liability, taxation, administration, ownership and how your business operates.

Sole Proprietorship


A sole proprietorship is generally the simplest business structure.


It may be appropriate for some individuals starting a small business on their own, but it does not provide the same liability protection associated with forming a separate legal entity.

Limited Liability Company — LLC


An LLC is a popular choice for many small-business owners.


Potential advantages include:


  • Personal liability protection
  • Flexible tax treatment
  • Straightforward administration
  • Separation between the business and its owners

Corporation


Corporations can be appropriate for businesses with more complex ownership structures or significant growth plans.


They generally involve additional formalities and compliance requirements.

Partnership


Partnerships allow two or more owners to operate a business together.


Because ownership, responsibilities, liabilities and financial arrangements can become complicated, professional legal and tax advice can be valuable.

Which Structure Is Right for You?


There isn't one structure that is right for every business.


Consider:


  • Number of owners
  • Liability concerns
  • Tax considerations
  • Expected growth
  • Investment plans
  • Administrative requirements


Virginia's official business resources recommend evaluating the benefits and limitations of different structures before making the decision.


Bossorama Tip: Talk with a qualified attorney and tax professional before choosing a structure based solely on an online article.