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etimes the excitement of entrepreneurship and starting our own businesses can get the best of us. We let emotions lead us to irrational decisions. Well, don’t let that happen to you. When incorporating your own business, think carefully about what is best for the business and your plans for it in the long run. Don’t just choose a C-Corporation or LLC formation because it’s sexy. Yes, it is sexy and sophisticated to own your own business. Yes, it’s cool to have the credit card of your own company. But think rationally when you make decisions that could significantly impact your bottom line and growth potential of your business.

Consider these 5 issues when incorporating your business:

1) Ownership
Who do you want to have ownership of the business? Only you? A small group of investors? Will owners and managers or employees be one and the same? Would you like to give employees partial ownership via stocks? Do you have hopes or plans for going public in the future? All of these factors can impact decisions when incorporating your business.
2) Control
This is different than ownership. Maybe you don’t want owners to have much control over how the business is run, for example that family member who has some extra cash for investment, but not much business sense. Or maybe you prefer the owners to have complete control over budgets and major decisions, leaving management with only control over what is necessary. How complex do you intend control to be? One or several clear leaders, or checks and balances? Incorporating or LLC formation have different methods for dealing with your plans for control of the company.
3) Employees
How many employees? Or maybe you’re starting a business only for yourself. What kind of benefits do you want to provide for them? Certain tax credits, i.e. MERP, are only available to certain kinds of business forms.
4) Growth and Investment
When thinking about growing your business, maybe you’re hoping to just be big enough to sustain several people, or maybe you want consistant, unlimited growth. How will you achieve this? Will you spend all the business money on growth or build up cash assets? You might also consider the investments of others, such as family, friends, angel investors, or venture capital firms. When incorporating, it’s important to consider how the business formation effects your growth strategy and the perspectives of prospective investors.
5) Expansion
Beyond organic growth, would you ever consider acquiring another company, a competitor or maybe a supplier or client? Or will you use your current business to start new businesses in the future? Your incorporation decisions impact the ability of your business to expand and the costs associated with expansion.

When incorporating, the above 5 issues all play a vital role in the decisions you make. They make a difference in whether you should form an LLC formation or Corporation. They make a difference as to which state will best help you achieve your goals. Incorporating is actually a quite simple process if you’ve thought clearly about these issues concerning your business.

Thanks for reading the first 5 of the top 10 issues to consider when incorporating your own small business!

Read the next 5 important issues to consider when incorporating your own business here!

(While the above is intended to help educate you to make an informed decision and written to provide as accurate and valuable information as possible, please do not consider any of the above as professional or legal advice. Always be sure to get advice from authorized professionals whom you know to be trustworthy.)