The structure that you choose for your Wisconsin business can have a significant impact on how your company is allowed to operate. For instance, organizations that are structured as corporations may have greater access to working capital and limited owner liability. However, if your business is really more of a side hustle at this point, it may make more sense to operate as a sole proprietor.
The pros and cons of being a sole proprietor
The primary benefit of operating as a sole proprietor is that you don’t have to create a formal business entity. Therefore, you don’t have to file corporate tax documents or worry about ceding control your company to partners or shareholders. However, sole proprietors cannot sell stock in their companies, have more trouble getting business loans and have unlimited personal liability if they are sued.
The pros and cons of creating a corporation
A corporation is separate from its owner, which means that only company assets can be seized in a lawsuit. Corporations have the ability to sell stock and generally have an easier time obtaining working capital from lenders or investors. The potential downsides of running a corporation include the possibility of double taxation as well as the need to file tax personal and business tax returns each year. A limited liability company, or LLC, may be an ideal alternative if you are a small business owner who wants to protect personal assets while keeping paperwork to a minimum.
A business law attorney may be able to provide more insight into the different ways that you can structure your business. The attorney may also help your company create partnership agreements or other important documents. Legal counsel may help you apply for any permits or licenses that your company needs as well.