Hey Friends,
The day had arrived.
The school gym was transformed with rows of tables, occupied by various merchants. The basketball nets hung high above the crowd.
The old gray carpet held steady beneath my feet as I clutched a shoebox full of merchandise.
There I was, a 12-year-old boy, selling Pokemon cards at my school fair.
Fast forward 13 years, and I find myself still engaged in the art of selling. The only difference now is that I have the backing of a legal entity, which I'll discuss in greater detail later.
If you're interested in starting your own business, you must have a clear understanding of the organizational structures available to you.
Let's take a closer look at the four primary options.
A Brief Overview of Business Structures
🧍‍♀️ Sole Proprietor
You operate as an individual, with no partners. You completely control all aspects of the business. But, you are still personally liable for all of the debt or legal claims against the business.
🧑‍🤝‍🧑 Partnership
Next, we have partnerships, where two or more people control a business. Like sole proprietors, they're personally liable for any debt or legal claims against the business.
đź›– LLC (Limited Liability Company)
When forming an LLC, you make the company its own legal entity. Any legal claims or debt are directed towards the company, rather than you personally. Now, all of your personal assets are protected.
For only $300, and 10 minutes of paperwork (in Texas) - you are now the proud owner of a company.
One thing that I did not realize is that you can make an LLC in a different state than your own. Some companies will take advantage of certain tax laws in other states - such as Delaware & Wyoming.
🏢 Corporations
Lastly, we have corporations, which can be S-Corp or C-Corp. The main difference between the two is how the company is taxed.
Like LLCs, corporations are their own legal entity, which means your personal assets are protected. Plus, corporations have the ability to have shareholders, rather than just owners. (And if you're curious, LLCs can be taxed as C-corps.)
When you’re younger, you think that grown-ups have it all figured out. When you become a grown-up, you realize that no one knows what is going on.
That’s how I feel after making this LLC. I thought it was such a monumental task, that would change my life as an entrepreneur. Now I know that even with an LLC, I have no clue what I'm doing. But, I’m making progress…
If you have wanted to start your own thing, this is a reminder to take action on it now.
đź“š Quote of the Week
Thanks for reading,
Have a great weekend!
-Rocky “Pokemon Trainer” Ferony