Entrepreneurs make America great. They are fast-forward thinkers and developers, inventors of products or creators of next-generation services. A large proportion of name-recognition companies originated in the Bay Area. Today, San Francisco is the favorite start-up mecca in the nation. When an entrepreneur lands on a service or product that feels right, excitement drives the motivation to progress.
Opening a Bay Area business is the next step. Product design, development and implementation are the exciting parts of entrepreneurship. Business waters may seem a bit murky. Most entrepreneurs understand they need a business structure. They consider the best business type to use if they operate out of their garage, go online or open a storefront.
Advantages of the right business structure
The American dream is to work in an area of talent or interest. Getting paid to do it is the bonus, but not the prime motivation. Entrepreneurs at this stage need to slow down and reverse their reasoning. The bonus is loving what they do, but the motivation must involve profit for the enterprise to remain viable.
It takes both vision and business acumen to be a successful entrepreneur. Fortunately, setting up a good foundation does not require a business degree. An entrepreneur can and should hire a professional in corporate law.
Basic business structures
- Corporation: This structure is perhaps most familiar. It is a perfect fit for an entrepreneur who has grown the business and has hired a team of employees. The advantage is in the ability to attract investors. Corporations also allow unlimited stock issues.
- S-corporation: While providing some good tax advantages, an S-corporation can sell stock to a limited number of investors. It is a "corporation lite" structure and a good stepping stone to an eventual full corporation.
- Limited liability company: An LLC supports a product or service that favors slower growth. An LLC offers the important advantage of flexibility. The structure is a hybrid of positive features drawn from both partnerships and corporate structures.
- Limited partnership: An LP is a basic business structure. It involves two or more owners whose earnings reflect the percent of their investment in the company. The advantage of an LP, particularly for entrepreneurs who are still finding their business legs, is that duties and responsibilities, including how partners share profit and loss, are clearly spelled out. The simplicity of this structure allows entrepreneurs some room to refine their product while learning about business.
Entrepreneurs are not wedded to a particular business structure. They do not have to progress through structures in a specific order, either. If a new entrepreneur wants to form a corporation at the beginning of his first venture, he can do so with an integrative corporate professional to guide him through the legal hills and valleys.