Before starting a business in Wisconsin, choose the type of business structure you are going to operate is necessary to limit your exposure to personal liability, mitigate tax implications and ensure that your business is run as effectively as possible. You should make careful considerations that should be made about business organizations.
The law of business organizations is the body of law relating to the formation, management, and dissolution of businesses. There are several ways a business can be organized. Every type of enterprise structure has to follow its own set of rules. Also, every type of business structure comes with its advantages and disadvantages.
Preparing a business plan
You must write a business plan beforehand before you choose a business entity for your business. Most people just write a business plan because until a business plan is submitted the financial institution will not loan them money. That’s a valid reason but there’s a bigger benefit. Creating a business plan brings the ideas out of the mind of the entrepreneur and helps create a blueprint for where the business is going. Business planning is a critical component of successful business growth.
Choosing the right business structure in Wisconsin
You must be prepared to handle any legal issues that may arise when you manage to start a business. Whether you choose to manage your business as a Sole Proprietor or as an LLC, you’ll need to make important legal, tax, and strategic business decisions. The business entity you choose will influence any aspect of your operation, so with the assistance of an expert business organization attorney, you can make the decision.
Common types of business structures in Wisconsin
- Sole Proprietor
You are the sole owner of the business and at the same time have complete control, this also implies that you are personally liable for any debts and liabilities.
A single business is usually owned by two or more partners in a partnership. All of the owners contribute to the business operation and finance, including decision making and profit/loss.
A corporation is established as a separate legal entity owned by shareholders, who are legally liable for the debts and acts of the business. Such a form of an entity may have more specific legal and tax criteria so it should be reserved for larger companies.
The Limited Liability Company (LLC) is a popular business structure as it enables owners to take the benefit of both corporation and partnership business types. The benefits of this business structure are that profits and losses can be passed on to the owners without the business itself being taxed while the owners are protected from personal liability.
Other considerations when starting a business
While there are a lot of important things to think about when selecting a business form some of the key considerations include your choice for tax treatment, whether you intend to capitalize the company, how you plan to issue stock and sell it publicly, how you intend to arrange your business management and issues related to business owners ‘ liability, among others.
If you are planning to start a business in Wisconsin and do not know which entity to choose, it is strongly recommended to get in touch with an expert business organization attorney to help you manage the process. Please reach out to us at (920)-921-2300, through our live chat feature, or with our contact us form below.