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Why It’s Important to Properly Structure Your Business


The structure of your business is crucial to your success. An improperly structured business can cause financial and organizational problems. These problems can be avoided by taking the time and effort to choose the right structure.


Reduce Your Liability

Certain business structures can lessen your personal liability. In a sole proprietorship, the business owner is 100% liable for any damages or lawsuits. This can be incredibly risky, and many people are not willing to take this responsibility upon themselves. For this reason, LLCs are quickly becoming the structure of choice for small businesses. Owners of an LLC are only liable for what they put into the business; claims and lawsuits against an LLC cannot touch your personal accounts

or assets. You need to do some prep work before you can register your business as an LLC. Articles of Organization need to be filed with the state in order to make your business official. This can be done online or in person.

Simplify Your Business

You want to make sure that you are establishing the right business structure for your business needs. For example, you would not want to establish a corporation if you will be the only employee. Before you start a business, make sure your business plan is established so you can structure for your needs. If your business is small and you’re the only person involved, or if it’s just part-time, you might be better off with a sole proprietorship. Although proprietorships have more personal risk, they take much less time and money to maintain. You can avoid much of the complicated legal and financial paperwork of other business structures as a sole proprietor.

Structuring your business properly will help keep things as simple as possible.


Increased Efficiency and Productivity

A properly structured company will work like a well-oiled machine. Each employee will know their role and the person to whom they report. In an LLC, partners can split up paperwork and other management responsibilities. Sole Proprietors will have to fend for themselves in terms of ownership paperwork, but they can manage this by being well organized. Any business owner can hire employees to help. Additionally, having the right business structure will help you ensure good communication and plan for growth and expansion. A properly structured business will see increased efficiency and productivity.

As you take into consideration issues of liability, simplicity, efficiency, and productivity, you will be able to find the best structure for your business. This will set you up for success both now and in the future.


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