When you launch a new company, you will be faced with several decisions that must be made. However, there is none more important than choosing the business entity under which you will operate. Your choice will have a number of tax and legal implications. Before making a selection, it’s wise to consult an accountant who has plenty of experience helping entrepreneurs form businesses. They can help you weigh the pros and cons of each option while taking the following factors into account.

What to Consider When Selecting a Business Entity

1. Liability Protection 

Personal liability is usually a top concern for business owners. Decide if you want separate ownership from management to protect yourself and any personal assets from lawsuits brought against the business. Corporations, LLCs, and limited partnerships allow you to do this, whereas sole proprietorships and general partnerships leave entrepreneurs vulnerable to business liabilities.

2. Tax Treatment 

Although a lawyer will be able to draft the organizational documents you need to form your business, you will need an accountant to find out what the tax consequences are for each type of business entity you are considering. It’s imperative to make sure you understand the different ways taxes are treated for each type of entity. Some structures require double taxation, while others consider all profit personal income. 

3. Capital Investment

You will also need to think about how you plan to fund your business. If you need to obtain outside funding from investors, you won’t be able to establish a sole proprietorship. This requires entrepreneurs to obtain funds solely through their personal accounts or by taking on partners. An accountant can help you go over all your personal finances to determine the best way to support your venture. 

Selecting a business entity takes careful thought and should only be done after seeking advice from an accountant. The professionals at Gillette & Associates LLC CPA can assist you in choosing the correct set up for your business. They will help explore all your options in detail so you can make an informed decision. Having served entrepreneurs in La Crosse, WI, for over 20 years, they’ve earned a solid reputation for providing reliable services. Call (608) 784-8355, or visit them online to learn more.