1-10 Choosing a Business Structure

Choosing a Business Structure

Before you start your business, determine which structure will be the most beneficial to your business

Learning Objectives

At the end of this module, you will be able to:

? Know about various business structures available. ? Discern the legal and tax implication of the various business structures. ? Identify the business structure best suited for your business.

FDIC OMWI Education Module: Choosing a Business Structure

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About FDIC Small Business Resource Effort

The Federal Deposit Insurance Corporation (FDIC) recognizes the important contributions made by small, veteran, and minority and women-owned businesses to our economy. For that reason, we strive to provide small businesses with opportunities to contract with the FDIC. In furtherance of this goal, the FDIC has initiated the FDIC Small Business Resource Effort to assist the small vendors that provide products, services, and solutions to the FDIC.

The objective of the Small Business Resource Effort is to provide information and the tools small vendors need to become better positioned to compete for contracts and subcontracts at the FDIC. To achieve this objective, the Small Business Resource Effort references outside resources critical for qualified vendors, leverages technology to provide education according to perceived needs, and offers connectivity through resourcing, accessibility, counseling, coaching, and guidance where applicable.

This product was developed by the FDIC Office of Minority and Women Inclusion (OMWI). OMWI has responsibility for oversight of the Small Business Resource Effort.

FDIC OMWI Education Module: Choosing a Business Structure

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Executive Summary

Consideration should be given to choosing a suitable company structure to provide the maximum legal and tax protections for your operations.

Each company structure has its own unique positive and negative attributes.

Examine each of the six major types of structures for their suitability to your operational structure:

1. Sole Proprietorship 2. Limited Liability Company (LLC) 3. Cooperative 4. Corporation 5. Partnership 6. S Corporation

FDIC OMWI Education Module: Choosing a Business Structure

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1. Sole Partnership (Slide 1 of 3)

A sole proprietorship is the simplest and most common structure available for a business. It is an unincorporated business owned and operated by one individual with no distinction between the business and you, the owner. You are entitled to all profits and are responsible for all your business's debts, losses, and liabilities.

How to form a sole partnership:

? No formal action is required as long as you are the only owner.

? Depending on industry, state, and locality regulations, licenses and permits may be required.

? If you choose to operate under a name different than your own, you will most likely have to file a fictitious name (also known as an assumed name, trade name, or doing business as (DBA)).

? You must choose an original name; it cannot already be claimed by another business.

FDIC OMWI Education Module: Choosing a Business Structure

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