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Wednesday, May 03, 2006

Starting a Computer Business – Selecting a Business Structure

Planning is key when you are starting a business. By planning your business carefully, you will be planning for success. One of the first steps you need to take is to select a business structure that will fit your new company. Knowing the different types of businesses and how the IRS and government will treat each is important to making the right decision.

Sole Proprietorship

If you are starting a sole proprietorship, all you need is a business license. The biggest problem is that if a sole proprietor is sued, all his personal assets are at stake as well. Especially in computer consulting, liability is a major issue.


When two or more people are working together, they can form a partnership. You must draft Articles of Partnership and apply for a business license. Liability is once again an issue because if one partner skips town, the other is liable for his debts.


A corporation is formed through state governments. Incorporation papers and capital stock are required. Since the papers have to be approved and often drafted by a lawyer, this type of setup requires a larger investment. In a lawsuit, though, you have limited liability and selling the corporation is simple. There is also the issue of double taxation.

Limited Liability Company (LLC)

An LLC provides a company with the tax benefits of a partnership and the limited liability of a corporation. Since these often do not require a lawyer, they can be a less expensive and time-consuming alternative to a corporation.

Learn more about the types of business structures available in the complete article (link above).

Submitted by Computer Consulting 101