As an entrepreneur, starting a retail business could be a lucrative venture for you if you plan ahead and do it right.
From acquiring a space for your store to sorting the finances and marketing your business, you have to take care of a lot.
One of the major decisions that will have a bearing on how your business operates is the kind of business structure you choose for your retail business.
In this post, you will get an overview of the top business entities for starting a retail business. You will also learn their advantages and disadvantages to help you make the right choice.
Understanding the Major Types of Business Structures
1. Sole Proprietorship
It is the simplest type of business entity preferred by most individuals who want to start small. There is a sole owner who operates the entire business and is responsible for all the liabilities including the profits and losses.
This is not a separate legal entity and you do not have to pay corporate taxes for it. The entire income is considered as the personal income of the owner.
2. Limited Liability Company (LLC)
LLC is the most preferred business structure for startups and small businesses. As the name suggests, while forming an LLC the liabilities are limited as you will be starting a retail business with one or more partners.
The biggest advantage of an LLC is that it offers personal asset protection. LLC is a separate legal entity and the owners have to pay fees to the state as well as a certain amount of tax. To start an LLC, you have to open a business account to handle all your transactions.
Are you still in two minds about opting for a sole proprietorship or LLC or a corporation for your retail business?
Go through this infographic by GovDocFiling where the pros and cons of each business structure are systematically laid out for you. Be informed and select the right business entity for your retail business.
Infographic via: GovDocFiling.com
About Author: Brett Shapiro is a co-owner of GovDocFiling. He had an entrepreneurial spirit since he was young. He started GovDocFiling, a simple resource center that takes care of the mundane, yet critical, formation documentation for any new business entity.