Various business structures are available. Each one offers different benefits and risks.
Where have all the entrepreneurs gone? Based on data provided by the Census Bureau, it appears that the number of new firms created in the United States is declining. The data shows that this number is nearly one-fifth of the annual average present between 1998 and 2008. A piece by The Economist dug into this question, noting that although the overall number of new firms may have decreased, the odds of these firms finding success in the marketplace may be higher than ever before.
The piece points to additional data provided by a Kauffman Foundation report to support this contention. It analyzes the likelihood of success for a new business by measuring a number of attributes, including the firm's employment growth in the first five years and revenue of $2 million in a three year period.
What does this mean for business opportunities in Georgia?
It appears that business is thriving in Georgia. Georgia's Secretary of State Brian Kemp recently announced that the state broke previous records with over 600,000 filings for annual registration.
These numbers support previous claims that Georgia is one of the best states for business. Governor Nathan Deal announced that Georgia received this honor for the third consecutive year from Area Development.
How can an entrepreneur better ensure success?
Arguably, one of the most important steps for an entrepreneur involves business formation. Choosing a business structure can help set the business up for success while also providing a number of benefits for the business owners. Three examples to consider include:
- Sole proprietorship. Although very easy to set up, the United States Small Business Administration (SBA) cautions that this form of business operation does not provide protection to the entrepreneurs' personal assets. As such, creditors could come after both the business assets and personal assets. Although risky, benefits are present for those who are just starting and want to get an idea of whether or not their business will survive before officially incorporating into a structure that offers more protection.
- Limited Liability Company (LLC). This business structure offers protection of personal assets. There are some tax advantages to this structure as well. In many cases, personal income is provided without the need for corporate taxes, as is present in the next business structure on this list.
- Corporation. There are a number of different types of corporations that are available for business owners. Some examples include the C corp, S corp and close corporation. These forms offer the highest level of protection to business owners. In exchange, they are also often the most costly.
Determining the right business structure for your Georgia business requires a careful review of your business goals and risks. Legal counsel can provide guidance through this process, outlining the benefits and risks of each option and helping to better ensure that your business interests are protected.
