If you are contemplating starting a business, the first question you should ask yourself is “What business structure should I adopt?”.
Individuals starting a business on their own have the option to operate as a sole proprietor or incorporate a separate company and run the business through the corporation. Multiple individuals who are thinking about getting into business together have the option of entering into a partnership agreement or incorporating and entering into a shareholder’s agreement.
Determining which business structure is the best for you, should be dependent upon the following factors:
i) personal liability (what happens if you or your company gets sued?);
ii) tax liability (what is the best method for minimizing the overall taxes you pay?); and
iii) the process for exiting or winding up the business (what happens if you want to exit the business?).