1. Individual Company (Sole Proprietorship)
Description: The simplest and most common way to start a business; owned by a single person who has complete control.
Benefits: Easy and economical to establish, complete control, minimal bureaucratic requirements.
Benefits: Easy and economical to establish, complete control, minimal bureaucratic requirements.
Recommendation when starting out: Ideal for low-risk businesses and for entrepreneurs looking to test a business idea with minimal investment.
2. Single-Member Limited Liability Company (Single-Member LLC)
Description: A single-owner LLC combines the simplicity of a sole proprietorship with the liability protection of a corporation.
Benefits: Personal liability protection, tax flexibility, business credibility.
Cons: More expensive and complex than an individual company, may have taxes at the state level.
Getting Started Recommendation: Suitable for sole proprietors who want liability protection without the complexity of a corporation.
3. Multi-Member Limited Liability Company (Multi-Member LLC)
Description: Similar to a single-member LLC, but owned by two or more members.
Benefits: Protection of personal liability, flexibility in the management and distribution of benefits, you can choose the tax treatment.
Cons: Management can be more complex, a clear operating agreement between members is required.
Recommendation when starting out: Ideal for partners looking for flexibility in management and protection against personal liabilities.
4. S Corporation (S Corp)
Description: Allows income and losses to pass directly to shareholders without being subject to corporate taxes.
Benefits: Personal liability protection, capital raising opportunities, business perpetuity.
Cons: Double taxation (taxes at the corporate level and then to shareholders), stricter regulations.
Recommendation when starting out: Best for businesses that plan to reinvest profits in the company or are looking to raise funds through the sale of shares.
5. C Corporation (C Corp)
Description: Allows income and losses to pass directly to shareholders without being subject to corporate taxes.
Benefits: Personal liability protection, capital raising opportunities, business perpetuity.
Cons: Double taxation (taxes at the corporate level and then to shareholders), stricter regulations.
Recommendation when starting out: Best for businesses that plan to reinvest profits in the company or are looking to raise funds through the sale of shares.
Pros Generales:
Sole Proprietorship y LLCs: Menos formalidades, más control personal.
Corporaciones: Acceso a capital, separación clara entre propietarios y gestión, continuidad del negocio independientemente de los cambios en la propiedad.
General Cons:
Sole Proprietorship: Unlimited liability for debts. LLCs: May be more expensive to form than sole proprietorships. Corporations: May be complex and expensive to operate, subject to more regulations
Final Recommendations:
Assess personal risks and the need for liability protection.Consider the importance of access to capital and investment structure.Consider long-term objectives and business growth potential..
