Choosing Your Business Structure
Many people wonder what approach will work best when choosing a business structure. Dr. Jordan Sudberg has been a business owner and franchisor for over twenty years, learning from successes and failures. He is an expert in business structure and unique situations and has written several books on choosing your business structure.
1. Continuity of Existence
Dr. Jordan says assessing the continuity of existence of your business is a must. The most important thing one can do is ensure that your business is always open for business. This means that one has an exit strategy in place. For many people, a business structure they take with at least one other person is an excellent approach to continuity because there is always someone who can take over if something should happen to the owner. Partnerships, joint ventures, and limited liability companies are all structures that can help provide continuity for your business.
Dr. Jordan says another important thing is to consider the structure of your liabilities. Limited liability structures like limited liability companies, LLCs, or partnerships will provide a very high level of protection for business owners. Dr. Jordan also says that a person should be aware that some limited liability protection will limit the types of investments and partners one works with. It is far better to have little liability protection and limitation on your liabilities than to have none.
3. Complex Procedures
Dr. Jordan says that the best business structure is one that has a simple procedure for choosing a new owner or being able to step in if something happens to the current owner. This is important so that there are clear procedures for when such things may arise. To have the best chance of success with doing this, it would be best if one has this procedure in place before starting their business.
4.Government Regulations and Control
Another factor one should consider is that some businesses may need to follow specific government requirements and regulations. A structure that allows flexibility in administering these rules may be a perfect one to go with. This would enable the business to run within the confines of the laws and regulations.
5. Investment Needs
Dr. Jordan says another essential factor to consider is the company’s capital needs. Some businesses increase and need a lot of money to grow. Other companies may have small capital needs but have high operating costs. This means one should look closely at their business’s cash flow to see what kind of structure will work best for them.
6. Tax Savings
Dr. Jordan says that tax savings are another aspect of choosing a business structure that should be considered when starting your business. A business structure that can save you on taxes can be very beneficial because of the revenue one receives from having employees or from the fact that you are making investments. There are many advantages to choosing the business structure that will save one’s company money.
Dr. Jordan Sudberg emphasizes the need for one to weigh all the advantages of a particular business structure seriously. This will help one decide on which business structure is best for them. He encourages one to be aware of the disadvantages to make an informed decision and select the best structure possible.