Starting a retail business is a complex process that requires a lot of important decisions at the outset. One such important decision is choosing the right legal structure for your new business.
A lot of things will depend on your choice, including:
- How your business will be taxed
- The level of liability protection you will get
- How easy it will be to secure funding and expand
- How much control you will have over the business
- And more!
So, it is crucial to choose the right business structure for starting a retail business.
But how will you make that choice?
Don’t worry, that’s what we are here to help you with. In this post, you will find information to help answer the question: which business structure is best for starting a retail business?
So, let’s get right to it.
Which Business Structure is Best for Starting a Retail Business?
The three best choices for starting a retail business are Sole Proprietorship, LLC, and Corporation.
It is easiest to start a Sole Proprietorship, and it is a great choice if you want to start a small-scale local business. However, it is not the best option if you want to scale your business at some point. Also, your personal assets will be at risk if the business fails.
Corporations are the best option if you are starting a large-scale retail business with multiple locations. It’s easiest to get funding for a Corporation and you can even make your company public by issuing shares. However, you will need to pay double taxes—personal income tax and corporate tax.
That leaves us with LLCs.
LLCs provide the best of both worlds. You can get liability protection and the option to get taxed as a Sole Proprietorship, Partnership, or Corporation. That makes it the most versatile and flexible option for starting a retail business.
Still not convinced?
Check out this infographic that details the pros and cons of each of these entity types and then take the final call.