Virginia is a place of opportunity, and many people with an entrepreneurial spirit will want to establish a small business in the Richmond area. One of the most important decisions they will have to make is what business structure they want to operate under. The following is a brief overview of some common business structures, but as always, it is important to consult with a professional when establishing a new business so you can make decisions that are in your best interests.
Perhaps the simplest business structure is the sole proprietorship. In a sole proprietorship you own your business, and no separate business entity is created. However, this means that you will be liable for any business debts incurred or business obligations undertook.
If you are creating a business with another person or persons, you may choose a partnership as your business structure. A partnership may be a limited partnership or a limited liability partnership. In a limited partnership one of the business owners will have unlimited liability, while the other business owners will have limited liability and limited control over the business. Generally, the terms of this type of business are documented in a partnership agreement. In a limited liability partnership, all the business owners have limited liability that protects them from the business’s debts as well as actions taken by the other business owners.
A third type of business structure that may be worth considering is a limited liability company. Business owners of an LLC will not personally be liable for any debts the business incurs or any legal claims against the business. In an LLC, if one business owner decides to leave the business, unless the business owners established an agreement addressing this issue, then the LLC may need to be dissolved and re-established to reflect who now owns the business.
This is only a brief overview of three common types of business structures. Other business structures, such as the many different types of corporations, are not discussed here. Ultimately, those wishing to establish their own business in Virginia will want to explore all their options so they can make decisions that are in their best interests and the best interests of their business.