If you are a business owner, one decision you have to make is which business entity you should adopt. There are several different classes of business registration. In this post, we will look at all of them briefly, then you can decide whether Inc. or LLC is better for your business.
Business Registration Types
There are 13 major business types. You can see them all at this site. Keep in mind that this is the site for the state of Washington. But you can find similar business entity information within your state as well.
For purposes of this post, we will briefly look at a few of the other major types then discuss LLC and Inc. to see which one you want to consider.
Sole proprietor status is reserved for the business owner who is the sole owner with no partners. If you have a legal partnership associated with your firm or if you share the business with a business partner, you would not qualify for this status.
However, if you are an independent contractor or if you file your income taxes under your name only, you may want to file as a sole proprietor. This status does not give you the protections legally or financially that filing as an Incorporated business does. But you also do not have to pay the fees associated with incorporating.
If you are married, and your spouse is your partner, you may still be able to file as a sole proprietor. But if you have partners outside of this, you will need to register as an LLC or Inc. The sole proprietor status is meant only for one or two people who are married and own a business and is not intended to be the basis of a large corporation. Many businesses start here though and move to LLC or Inc. later on.
LLC is known as a limited liability company. An LLC company is formed by one or more people where there is a legal contract drawn up. Within that contract, you will have details on your business organization including distribution of profits, equity assignments, and other financial statements.
This status entitles you to do business for profit (as opposed to a non-profit corporation) which does not allow you to make a profit. The LLC status lets you start a business where the legalities are spelled out from the beginning. This may prevent misunderstandings over the long haul so that you will not experience legal issues with contractors or employees.
You will not have quite as many protections under the LLC status as you would with the Inc. status. But it allows you to operate as a business without all of the liabilities that you would have as a sole proprietor.
Limited Liability Limited Partnership (LLLP) is a variation of the LLC qualification. When you file as an LLLP business, your agreement will include a statement regarding the business partnerships involved in your organization. This arrangement may shield general partners from liability, but the specifics on this is dependent on the state in which you reside and operate your business.
Inc. (Incorporated status)
The Inc. status means that your business is incorporated. When you incorporate your business, you have a much more complex infrastructure. The corporation also protects you from civil liability because it puts the Inc. status between you and your business. When you file income taxes, you will file separately under your corporate name, and the corporation is seen as a separate entity from you as an individual.
This often protects you individually from liabilities or some responsibilities within your company structure and may keep you from suffering individual financial setbacks due to this status. As an Incorporated business, your business has certain rights, economic benefits, and tax deductions that go beyond the scope of the individual.
You will have to pay licensing fees, however, as well as other fees on an annual basis and there is usually a $100 fee to incorporate for the first time.
Wikihow.com has an online tutorial that teaches you the steps of combining if you choose to go about it in the traditional way.
A local lawyer can get you incorporated if you want to do this. You can also do it online with sites like incorporate.com. They make the process easy without having to consult individual local attorneys to complete the process. How you do this is up to you, but you should just make sure it is done correctly.
Once you are incorporated, you will be able to conduct business as a corporation and hire employees under the corporation status. Keep in mind, however that you will also have some additional responsibilities that you will need to keep in mind.
How Customers See Your Business Status
One of the things you may want to consider when deciding on your business status is how your customers will see your business. It does not make a whole lot of difference when it comes to your status to your customers. The “Inc.” status may hold slightly more credibility with customers in general, especially those who have never heard of you. But the LLC status also indicates that you are a registered business that has gone through the legal channels to do business.
Either way, you can succeed. But the best part of the business registration status is what it can do for you “behind the scenes” regarding legal or financial protections rather than any real benefit in improving your image in the minds of your customers.
When creating a logo design for your brand or business, copyright and trademarks are something you should consider as well.
Your Brand Presence
Once you decide on your business status, remember that your credibility is more about what people see than what your status is.
One of the things they see is your website. So make sure this is excellently designed and that you have a social media presence. You should make sure that your branding is excellent across different platforms and the web.
How Your Logo Helps Your Branding
Your logo is one of the most important aspects of your branding. It helps you gain credibility by reflecting the values of your brand and is seen in several different places on the web and across devices.
For this reason, your logo should be the best that it can be. It’s much more important than your business registration status, in the long run.
If you do not have a good logo yet for your business, visit with us online at logodesignteam.com. We have been in the business of creating custom-designed logos for companies for many years, and we can do the same for you.
View our portfolio to see the types of things we can do for you regarding your logo. You can put your logo on any physical products as well as create your mobile app from your logo. There is no limit to how much your company logo can help you if you have one that is professionally designed to fit your business.
The first thing you should do is to decide on your business status and get that in order. Then brainstorm ideas on how you want to represent your business within your brand and your online presence.