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The Best Way To Form Your Business When Self-Employed – Jim DePalma

The Best Way To Form Your Business When Self-Employed - Jim DePalma

Are you self-employed and struggling to decide how to form your business? Deciding the best way to structure and organize a self-employed business is an important decision that has wide-reaching implications. From managing taxes, increasing or decreasing risk levels, determining organizational processes, and more, the type of formation you choose must align with the growth path of your company — now and in the future. This blog post by Jim DePalma will explore what forms are available for businesses owned by a single proprietor so that you have all information needed to make an informed decision about which is right for you. Let’s dive in!

What Is The Best Way To Form Your Business When You Are Self-Employed? Jim DePalma Answers

When you are self-employed, there are a number of different ways to form your business, says Jim DePalma. Choosing the right structure for your company can have a major impact on its success. Options range from sole proprietorship, partnership, and limited liability companies (LLCs) to corporations. It is important to consider all of these options carefully so that you can pick the business formation model that best suits your needs.

One of the most popular choices when it comes to forming a business as a self-employed individual is a sole proprietorship. A sole proprietorship is owned and operated by one individual and offers complete control over the company’s operations and finances. Furthermore, this setup requires less paperwork than other types of businesses, making it a popular choice among self-employed individuals. However, sole proprietors are personally liable for all business debts and obligations, meaning that personal assets may be at risk if the company is sued or incurs debt.

Partnerships also offer an attractive option when forming a self-employed business. This type of business setup includes two or more owners working together to operate the company. Partners generally share responsibility for day-to-day operations and finances, as well as liability for any debts incurred by the partnership. When contrasted with sole proprietorship, partnerships provide limited financial protection from legal action taken against the company.

Limited Liability Companies (LLCs) are another popular choice when creating a self-employment venture. LLCs provide the protection of a corporation while allowing owners to benefit from more flexible tax and management rules. LLC owners are generally not personally liable for debts incurred by the company, making it an attractive option for those wishing to limit personal risk.

Finally, corporations offer a more complex business structure that may be beneficial in certain situations. According to Jim DePalma, corporations are owned by shareholders and overseen by a board of directors. This type of business formation provides strong legal protection for the company’s owners, as they are usually not held responsible for any debts or other liabilities incurred by the corporation. However, setting up and running a corporation requires far more paperwork and compliance than other types of businesses, which can be costly and time-consuming.

Jim DePalma’s Concluding Thoughts

When considering whether you should form your self-employed business as a sole proprietorship, partnership, LLC, or corporation, it is important, as per Jim DePalma, to consider the potential risks, benefits, and costs associated with each type of business formation. Doing so will help you make an informed decision that best suits your individual needs. For instance, according to the U.S. Small Business Administration, more than 70% of all businesses in the United States are self-employed people operating as sole proprietorships. On the other hand, LLCs have grown in popularity over the past few years, with nearly 30% growth since 2012. Additionally, the number of corporations has grown by about 8%, and partnerships have grown by about 6%.