As a business owner, you want your company to grow and adapt to the times, but you may feel uncertain about overhauling its legal structure. Changing your business entity is not as challenging as you might think, and, in many cases, it’s the best way to achieve your company goals and protect your personal finances.
When Your Business Grows
Many businesses begin as sole proprietorships because they are relatively simple to establish and manage. However, the owner of a sole proprietorship assumes all of the risks associated with their business, which means their personal liability grows right along with the business.
When a business becomes a certain size, the owner may decide to convert to a new legal structure that offers more protection, such as a limited liability company (LLC) or a corporation. This way, the owner can limit their personal responsibility for the obligations of the business and avoid losing their personal property if the company faces bankruptcy or other challenges.
When You Want to Attract Investors
If you need a business loan, seed money, or a new partner with an ownership stake in your company, changing business entities might be the best way to make it happen. Business structures such as corporations and LLCs tend to be perceived as more formal and legitimate, so investors and other parties are more likely to take them seriously.
When your business has a more traditional, formal structure, people feel like they know what to expect and understand their investment options. Banks, venture capitalists, and other lenders are also more likely to feel comfortable investing in your business.
Contact a Business Law Attorney Today
No matter how you structure your company, you’ll be responsible for taxes and other business-related obligations. That said, you can reduce your tax burden, limit your personal liability, attract investors, and gain customers by choosing the appropriate business structure.
An experienced business law attorney in North Carolina can help you review the status of your company and decide whether restructuring may be the right decision. Contact the lawyers of Mullen Holland & Cooper P.A. to learn more in an initial consultation.