If you’re about to go out on your own and create a business, congratulations. Becoming an entrepreneur, especially an online entrepreneur is a good idea in this environment. When the government can’t shut you down due to a pandemic or whatever reason, having an online business becomes more valuable.
Before you start on your entrepreneurial journey, it’s important to understand the difference between three types of corporations. Once you cross over to the side entrepreneurs and others who make the economic engine run, you’ll wonder why you didn’t start sooner. Salaried employment is great for some people, less so for others.
But if you’re going to be an entrepreneur, do it right. There’s more to creating a business than buying a license (you do know you have to buy a license, right?) and creating a website
A Business’ Legal Entity Is Important
Most general contractors, plumbers, electricians, gardeners and graphic designers who set up shop don’t even think about what legal form their new business is going to take.
That’s legal “form” as in “organization or arrangement.” We’re not talking about a piece of paper you have to fill out, at least not directly.
Making the wrong decision about legal form can cost you serious money even before the first sale. You might have learned the terms “sole proprietorship” and “corporation” back in high school. They probably meant nothing to you then.
But now it’s important to understand what they mean. Every entrepreneur should know the pros and cons of the three types of corporations specific to your situation.