Selecting the correct structure for one’s new business venture requires careful thought and attention. Many business owners in Georgia find themselves struggling to decide between a corporation or a limited liability company. Both have their benefits or drawbacks, so when considering which business structure to use, entrepreneurs will need to think about things such as:
- Health insurance costs
Choosing a corporation
A corporation is usually a good choice if a business has a significant number of investors or is expected to have an increasing number of investors and owners. Many investors expect to have a tangible ownership in the business, such as stocks. A business can only issue stocks once it has been organized as a corporation. There are other benefits to running a corporation as well, such as being able to deduce the entirety of health insurance costs from profits. An LLC cannot deduct the entirety of its employees’ health insurance premiums.
Choosing an LLC
Small businesses or those with fewer investors may function better as an LLC. An LLC also offers unique tax protections to owners. When a business is formed as a corporation and owns property, and the property gains value, both shareholders and the corporation itself will be taxed. Conversely, an LLC owner will not need to pay double taxes on property owned by the business.
Choosing the right business structure can be a great way to get one’s business off to a successful start. There are many things to consider during this process aside from taxes, though, such as options for retaining employees. Taking the time to thoroughly review the possible benefits of various structures is a good place to start for most business owners in Georgia.