The Most Common Business Entities for Startups!
There are many steps to starting a business, but choosing a business entity is one of the most important ones. The legal and tax consequences of your business depend on the type of business you choose.
There are also different protections from liability and ways to keep an owner’s personal assets separate from their business assets. Here are some of the most common types of business entities that people use when they start a new business.
A business run by one person is called a “sole proprietorship.” Setting up a sole proprietorship is easy because you don’t have to fill out much paperwork to get started.
You just start the business in your name, and all of the money the business owes comes from your personal accounts. But this choice is also the most dangerous. When a person owns a business as a sole proprietor, he or she is personally responsible for all business finances.
“Doing business as” is what “DBA” stands for. It’s not really a business, but rather an application that gives your business a different name. If you are a sole proprietor and file for a DBA, you can give your business a name other than your own and stop using your own name.
This gives your business more credibility and gives you a little more privacy. A DBA, on the other hand, is not a legal name. When you change your DBA, your business doesn’t change.
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