Deciding what business structure to use when building a company may not always be an easy choice. Business owners in Michigan will find that different structures have different benefits and disadvantages. Those who may have relatively small operations may like the benefits offered to limited liability companies.
A significant amount of time and planning goes into opening a business. While working to put plans into action, there are certain things potential business owners need to do, including acquiring any permits required by the state and applying for a company name. In Michigan, and other states, those businesses that are considered limited liability companies have to go through an approval process before their company name is officially permitted for use.
Limited liability partnerships and limited liability companies are two similar but distinct types of business entity. Neither one is required to pay corporate taxes; instead, taxation falls upon the individual partners or members. Both entities are very flexible in their structure, allowing them to fit the needs of many types of company, but key differences between them set the two types apart.
Those who operate a business with exposure to liability may wish to consider the LLC structure. Sole proprietors or companies with many owners can utilize this type of business structure. One of the main benefits of such a business structure is the limited liability from lawsuits that it provides to its owners. Another reason to form a limited liability company is that it can be taxed in different ways.
Before establishing a business in Michigan, it may be helpful to take time to evaluate the various business formations that are possible. A sole proprietorship may be one of the simplest choices, but there may be an interest in business planning that will shield personal assets and finances. A limited liability company may provide a better option in this case, although many creditors still require personal guarantees of business debt.