03 Jan What Business Structure? What Bike?
One the questions that I get asked the most is: How should I structure my new business? When I a was a lot younger, and I worked at a cycling shop, the question I was asked most was, what kind of bike should I get?
The answer to both questions is likely one you’ve heard … it depends. This doesn’t however, make the decision any less important. In fact, choosing the type of legal structure for your company is likely one of the most important.
The main factors that set apart one business structure from another are taxation and owner liability. This is why you’ll often see businesses blend the two concerns by selecting entities that combine pass-through treatment and limited liability. You have probably heard of the most common: LLCs (limited liability companies) and S corporations.
There are also new tax considerations for 2018 – namely the new Qualified Business Income deduction, equal to 20% of qualified income. There are certain limitations to be aware of; be sure to ask your trusted tax adviser.
When first researching how you are going to structure your business, you’ll find that the most common forms of entities are:
– Sole Proprietorship
– Limited Liability Company
Each of these choices come with certain advantages and disadvantages, so having a key understanding of your criteria is important. To what extent do you need to be insulated from legal liability? How can you minimize taxation? What are the administrative costs? What are your future needs? These questions will have to be discussed and examined in order to make the most informed selection.
A thorough break-down of the aforementioned entities is outside the scope of this musing, instead, please contact Axiur Accounting if you’d like to set up a time to have a conversation.
Finally, you may be wondering after reading the title … what bike? Well, I started my cycling “career” (if you could claim mid-pack amateur racer as having a career), as a roadie. Therefore I am quite partial to a slick, light road bike. That isn’t going to be suitable for the Colorado trails, but hey, that’s why you buy both a skinny tire and a mountain bike. And while your at it, grab that cyclocross bike too.