Although most Americans seek the traditional path to stable income through employment, America still stands strong as the land of opportunity for entrepreneurs and small business owners. In fact, according to the Small Business Administration, 99.9% of all businesses in the US are small businesses, meaning they usually have less than 750 employees or less than $16M in annual revenue, depending upon their industry.
Legal Business Organizations and Entities
Doing Business As (dba)…
Starting your own business does not need to involve attorneys, state corporate filings, business plans, or marketing consultants. In the US, starting a business can be as simple as doing work for others that they are willing to pay you for.
Sole Proprietorship: Doing business under your personal name means you are doing business as a “sole proprietor.” Examples of sole proprietorship business names are:
- Landscaping by Riley Evans
- Ethan Hill’s Plumbing Service
Downsides include the potential for incurring legal liabilities of your work and limitations on what you can call your company.
Partnerships: If you do business with the help of another individual, you have formed a partnership, whether you have a written or verbal arrangement. A general partnership (informal) means you both leave yourselves open to unlimited liability for the debts and mistakes by the business. If you want to limit your liability, you must file a certificate with your state authorities, such as your state’s department of state.
Limited Liability Companies (LLC): LLCs offer tax advantages to the business owner(s) while also limiting the liability of the owner(s). For this reason, LLCs have become the most popular form of most small business start-ups. You can set up an LLC on your own or, if you do not understand the process and requirements, seek the advice of legal counsel.
S Corporations: If you get to the point of seeking investors (shareholders), you will need to consult an attorney, who will assist you to set up the best legal form of your company.
