As a business owner, selecting your business structure is a very important choice. While it’s ideal to pick the correct structure right out of the gate, it’s not always possible to anticipate how your company’s needs might change down the road.
Fortunately, your business structure isn’t set in stone. If it becomes necessary to make a change, here’s what to expect:
Before making the switch, make sure you’re armed with adequate knowledge about the different types of business structures. Make time to talk to a seasoned business expert, who can evaluate your unique case and provide targeted feedback.
Evaluate Your Options
Business entities differ from each other in five basic areas:
• Tax implications
• Formation and administration costs
• Investment options
• The individual needs of your business
Before making your choice, think through each of these five characteristics to determine which structure is the best fit.
• Switching from sole proprietorship/partnership to LLC/corporation: Your liability will change from unlimited to limited, but you’ll pay more in fees and expenses and will file more paperwork.
• Switching from LLC/corporation to sole proprietorship/partnership: If you’re changing a corporation, you’ll need to secure approval from shareholders and liquidate your assets. For both LLC and corporations, your tax obligations will change and you’ll need to adhere to new licensing and filing requirements.
• File a DBA
• Inform the IRS of your change
• Apply for a new EIN
• Register with state/local agencies
• Renew/reapply for licenses
• Notify your bank, insurance companies, vendors, customers and employees
Countybank Business Loans
Choose Countybank for your business financing. For flexible terms and personalized solutions, get started today by calling (864) 335-2400.