Do you want to professionalize your business, take advantage of a business opportunity, or collect money as a result of a service provided? Choose a legal status when your objective is to exercise an economic activity in a professional and habitual manner.
The choice of the legal status of your project to create or take over a business will allow you to have a legal framework and to practice legally. One of the most popular legal structures is a Limited Liability Company (LLC).
The Criteria for Choosing the Legal Business Structure
Your choice will have a very tangible impact on the protection of personal assets, the tax and social system, the opening of your capital to investors, or the operation of your business. So take into consideration several criteria like:
- Undertake alone or with others,
- The nature of the activity,
- The operation of the company,
- Credibility with third parties,
- To make money or for a non-profit purpose,
- The development of your activity (financing, investment, etc.),
- The protection of your assets,
- Tax and social implications,
After asking yourself the right questions, establish a hierarchy according to your project while avoiding making this choice based on a single criterion (social status, for example). Certain companies can take you through the whole criteria of choosing the right legal structure for your business. They should also help you understand all the consequences you are likely to face.
When to Define Your Legal Status?
Take advantage of a business opportunity as a service provider or launch a new product on the market: your project’s ambition will not be the same. So for projects that require investment, it is preferable to validate the potential of your market in a market study before asking the question of legal status:
- Is there a market?
- Does your product interest the market?
- Is the feedback from the first customers positive?
- Is there enough demand to be profitable?
Even if you “get it wrong” about your choice of legal status, you still have the opportunity to change it. On the other hand, if you don’t know your market well enough, you put your entire business at risk. So stay focused on your business study and validate as many indicators as possible to move forward in your project. Consider these essential factors to have a smooth time choosing the right legal structure for your company.…