We will now look at some of the most common business types and the advantages and drawbacks of each type.
When you need to decide on a Business Type?
In our first course, you decided on a business area, researched your business name, created a basic business plan and built a basic business website. You can do all of these things before actually starting your business. However, before you actually start a real business you need to take a few important steps in order to keep your local, state and national governments happy.
One of the first steps is decided on what legal type of business you will have. Some of the most common options include sole proprietorship, partnership, limited liability corporation (LLC) or non-profit. With a non-profit, you can either have a tax deductible non-profit also called a 501c3 or a more political but not tax deductible non-profit also called a 501c4. Finally, in Washington State, there is a new type of corporation called a Social Purpose Corporation or SPC which is run like an LLC but which can be organized for purposes other than making a profit – making it somewhat like a non-profit organization but with fewer rules.
Before we explain the legal steps for starting a business, let’s take a look at the advantages and drawbacks of each of these 7 types of businesses – as the exact steps will vary a little bit based on which type you choose.