When you own an Illinois or Michigan small business, you assume a certain amount of risk, but the amount of personal liability you take on will depend on the type of business structure you choose to create. At Pentiuk, Couvreur & Kobiljak, P.C., we understand that the business type you choose will have a direct impact on whether others can hold you personally liable, should someone sue or file a judgment against your company. We have helped many entrepreneurs with similar concerns select business formation types that meet their needs.
According to QuickBooks, all small business owners face some degree of risk, and this holds true regardless of whether they own companies facing obvious liabilities, such as transportation companies, or entities where the risks are less overt. There are, however, two key business structures worth considering if one of your primary goals involves reducing personal liability in your business.
The first is the limited liability company, and the second, the S corporation. A limited liability company, as the name implies, can help protect your personal assets, and most startup owners find that this is a relatively simple type of structure to operate and maintain. If, however, you plan to seek funding from investors for your new business, the S corporation may better suit your needs.
Operating an S corporation might take a bit more effort than a limited liability company because you must maintain a board of directors and host annual meetings with this type of business structure. However, an S corporation also helps protect your personal assets while letting you enjoy certain tax benefits at the same. Ultimately, the business structure best suited to your needs will depend on the specific goals and concerns of you and your business. You can learn more about this topic on our webpage.