Oklahoma is ranked the fourth most affordable place to live in the U.S., and companies have a probability of over 80% startup survival in their first year. This can be a lucrative state to start a business. But before you invest your money, you should know the right business structure that suits you and your goals. Here’s a look at the four most common structures you can use.
1. Sole proprietorship
A sole proprietorship is the simplest and most common type of business formation. This type of business is owned and operated by one person, and there is no legal distinction between the owner and the business. The main advantage of a sole proprietorship is that it is relatively easy to set up and operate. The disadvantages include unlimited liability for the owner and lack of continuity if the owner dies or becomes incapacitated.
2. Partnership
This is a business venture between two or more individuals who share ownership of the company. Partnerships can be either general partnerships or limited partnerships. General partnerships offer both partners unlimited personal liability while limited partnerships offer some protection from liability for the limited partners.
3. Corporation
A corporation is a legal entity separate from its owners or shareholders. It offers its shareholders limited liability. In other words, they are not personally responsible for the debts and liabilities of the company.
4. Limited liability company
An LLC is a business structure that provides both the benefits of a corporation and a partnership. It has members instead of shareholders, and these members have limited liability for the debts and liabilities of the company.
When choosing a business structure, you should consider several factors, including the size and scope of your business, the level of personal liability you are comfortable with, and the amount of time and money you are willing to invest in setting up and maintaining the business. The formation structure you choose should help you in drafting your business plan, securing funding, registering your business and, more importantly, achieving your goals.