Small business owners in Massachusetts remember the excitement that came with deciding to make their business more official. In the process of establishing a formal business, there are legal steps that must be taken for your business to be recognized as a company by the state.
What’s a company?
A company is any type of legal entity that’s formed with the intent to run and operate a commercial or industrial business. Establishing your business as a company can help you as far as taxes and financial liability go.
There are several types of business formation structures for a business owner to choose from, including sole proprietorships, partnerships and limited liability corporations. Each one is best for different purposes; for example, a company that wants to be publicly traded might file as a corporation. If more than one person starts the business, they might consider a partnership. However, if it’s just one person claiming ownership, they might start a sole proprietorship.
Benefits of starting a company
The main reason to turn your business into a company is numerous. Starting a company will let you more easily hire employees as well as diversify your income and eventually reduce personal liability.
Starting a company is also not a decision to take lightly. For as many rewards as there are, there is an equal – if not larger – amount of risk involved.
You’d be taking on a lot more financial, legal and emotional responsibility as you are the one responsible for its success. You’ll also probably be working long hours, investing a lot of your own money and dealing with new tax issues.
If you can make it past all of that though, you’re also seeing a great legacy in the making. And for as many financial risks, if done right, there can be a lot of rewards.