Virginia is the best place in the country to do business. This bodes well when you’re just starting, but you want to make sure you get off on the right foot so your company can realize everything you have in store.
Virginia came in first in CNBC’s rankings of the best states for business in 2019, the fourth time in the last 13 years. This means you’re in a fertile place for launching, but the high costs of doing business here could put your enterprise in jeopardy. It can be critical to establish the proper conditions for your situation to make sure you’re set to launch.
Forming a business can be complicated, and the right answer will be different depending on your situation:
- Sole proprietorship: Generally the simplest solution, this could be the way to go if you’re on your own. This system creates a business with very direct ties to you. You might avoid corporate taxes and annual filings, but the trade-off is that you are personally on the hook for any liability and you can’t take on business debt.
- Limited liability company: The protections that you don’t get from sole proprietorship could be available in a limited liability company (LLC). The business will likely shield your personal assets from things like unpaid business debts, vendor conflict and damages. The cost here comes with ongoing fees and taxes that are a step up from sole proprietorship.
- Limited partnerships: A common structure for two or more people that own a business together, partnerships of this type can allow you to maintain control over the entity even as you add others. But the members gain benefits alongside you, as they might gain protections against creditors and the partnership can work around taxes in estate planning.
- Corporations: Shareholders buy into a corporation that can hold its own debts and profits, separate from you. This also allows for limited liabilities like the LLC. Available in two varieties, you could form a C-corporation or S-corporation, depending on your needs. An S-corporation can come with tax benefits, but it also more limited when it comes to shareholders and not as well-suited for raising capital.
You’ll need to weigh the advantages and disadvantages of each system, and consider what will work best for achieving your goals. It can be a difficult process to get right, but one that could set you on the track for success.