How to Pick the Perfect Business Structure

Becoming a successful entrepreneur in the retail sector means ensuring you are on the right track from day one. To take your ideas and your enthusiasm to another level, you want to register as a formal business — this begins with figuring out what business structure you are likely to opt for.

There are a variety of choices when establishing the structure of your company. To help you choose which is ideal for you and your new company, let’s look at some of these options, in addition to the benefits and disadvantages of each.

What is the best structure for your company?

Sole proprietorship

When you enroll as a sole proprietorship, your company doesn’t become a separate legal entity from you — rendering you self-employed. This benefits you in your retail company’s profits become your personal income, and you just have to cover your self-employment taxes. A sole proprietorship also only requires a couple of actions to form, which makes it the simplest business structure to enroll as.

The principal disadvantage of registering as a sole proprietorship is that it supplies you with no legal protection for your personal assets. You’re directly accountable to your creditors. If your company fails, lenders can come after to cover outstanding debts.

If you’re not comfortable with this risk, it may be worth exploring different structures which will protect your hard-earned income.


If you plan on working with different people, then a partnership is a possible choice. Starting a retail business is a costly enterprise, and a venture can provide you with the benefit of pooling capital. Apart from that, partners can each share their knowledge and experience and delegate responsibilities.

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The three venture structures include:

  • General partnership: All parties share financial and legal liability alike. Partners a personally accountable for the debts that the venture takes on, and they divide the profits equally (unless otherwise agreed).
  • Limited partnership: This arrangement limits partners’ personal liability and can accommodate bonus arrangements and other nuanced agreements.
  • Limited liability partnership: This is a blend of general partnerships and limited liability partnerships. At least one spouse must be a general partner, with full personal liability for the partnership’s debts. At least one is a quiet partner whose liability is limited to the amount spent.
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Limited Liability Company

If you’re searching for convenience and personal asset protection, then enrolling as a limited liability company is an attractive choice for your retail business.

This arrangement is treated as a separate legal entity from you, protecting you and your assets from the business’ creditors. There are lots of advantages to setting up an LLC, such as having the choice to avoid double taxation, maintaining a flexible management structure, and using customizable possession choices.

Do note, however, that LLCs have to pay startup and yearly fees — added costs that sole proprietorships and general partnerships don’t entail — so it is ideal to consider whether the benefits are worth the cost in the first stages.



Businesses, like LLCs, are recognized as separate legal entities. These structures aren’t possessed by individuals; rather, shareholders establish ownership through shares of stock. The ownership of each individual shareholder doesn’t depend on the initial invested capital , and any shareholder can have a bigger part of the company by purchasing more shares.

While corporations provide protection for their shareholders, there are a few challenges to registering these constructions. For one, it is relatively tricky to establish a corporation in comparison with an LLC. Businesses are also taxed twice: first on the corporate level, and then all investors are taxed on an individual level. This puts lots of financial pressure on the people involved with the company.

Which to choose?

Overall, there are numerous important details in setting up your retail business, like considering your brand identity, advertising and promotion, and also the tools you will use to operate. It’s advantageous to select a structure that satisfies your needs, and it’s always smart to talk with a lawyer before forming your company.

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