Deciding which type of business is best for your company in South Carolina will depend on costs, taxes and other factors. Further consideration should be given to whether your business is a brick-and-mortar or virtual company or both.
The IRS considers two business types: corporations and pass-through businesses that combine personal and business taxes for tax purposes. Pass-through businesses or sole proprietorships are typical for businesses with one or two owners. Your business structure will set the stage for daily operations and lay the foundation for what happens in your absence.
What you should consider when choosing or changing your business type
Taxes, costs, operational authority and liabilities are essential considerations for your business formation. The guidelines are complex for each type and require extensive knowledge and understanding. The following lists are questions to help you with your decision:
- As a business, are you expected to pay Medicare and Social Security taxes for your employees?
- How much will the state and federal taxes be for the business type?
- What are the startup costs including building rent, insurance and property taxes?
- What are the corporate duties and responsibilities?
Ownership and profitability are other considerations for your business formation. Adding stipulations and conditions regarding the success or failure of the business will help you preserve your assets while minimizing loss. If your company has partners or is a corporation, you want to consider how disagreements are resolved.
Choosing between a corporation and a sole proprietorship
The size of your business will help determine whether you should go it alone or take on partners or investors, such as in a corporation. Both have pros and cons, and each has its own set of protections and risks for you to learn more about.