Consideration of the proper form of entity for starting a business can provide advantages with respect to taxes, raising future capital, potential public offerings and owner liability.
Most new ventures begin by default as sole proprietorships.
Without any planning with respect to the form of entity, individuals who begin new business ventures operate under their own names or sometimes under an assumed name filed at the county or state level. Conducting operations in this manner provides the least amount of protection for the business owners from liability and also the least amount of flexibility in income tax planning. There are certain advantages. It is the easiest type of business to form simply because there are no forms to file to start your business. Additionally, as the only owner, the sole proprietor has all of the decision making ability and power, without answering to any other individual or owner.