The decision of what type of business structure are you want to create is one of the first decision you must make in building a business. There are a few possibilities for creating your business structure you can be a sole practitioner, general partnership, or group practice, i.e., a corporation. Deciding on what you truly want will help you in the decision of the type of structure you want your business to take. The sole practitioner is the most common form of business structure, and this type of structure allows you to be the sole, you do not need a dba, and you have pass-through income. The sole practitioner is the Liability business structure to create. The next type of structure is general partnership is structure is when two or more people take responsibility for the business, and they divide up the chores of setting up a business. , will require a contract, and it is best to list all the duties that are needed and then divide them up among the partners. This too is a simple structure, and the income will pass through to your income. In some states, you can create LLC or Limited Liability Company or a PLLC Professional Limited pass-through Company.
For simplicity sake, if you live in California, you are not able to do this type of structure. An LLC is a business structure that provides some liability protection for the owners as the owners only have risk up to what they have individually invested in the company and are not personally responsible for the company debt. A PLLC is designed for license professions with the same liability protection and pass-through taxation. In many states, if you are a licensed professional, you must create a PLLC and not an LLC. Lastly, pass-through there is a business structure and you can set it up as a C-Corp or an S-Corp. These are for tax purposes and talking to your CPA or account will help you determine which structure is right for you and your business. You can always switch business structures if you determine later you need a different one.
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