When you open a business, you are required to create a business structure. However, you may not realize that this isn’t something you can’t change.
In fact, there are a few reasons you may want to change your business structure at some point. Some of the reasons it may be time to consider changing your business structure are listed below:
Taxes are one of the top reasons you may want to change your business structure. For example, changing your business from a partnership to a C Corporation means that you only get taxed on what you receive as dividends rather than reporting business gains and losses on your personal tax return. No business structure eliminates your tax responsibility, but one structure may be better for your situation than others.
Reduce personal liability
Owning a sole proprietorship is an option many new business owners choose. However, it comes with more risk than the others. You are personally liable for all business obligations and debts in this structure. You are on the hook for all its outstanding debts if your business goes bankrupt.
If you want to be approved for a loan or take on a partner, changing the business structure may help make the concept more appealing. A formal structure will establish clear responsibilities and rights so everyone knows their roles and options.
Is it time to change your business structure?
As you can see, there are a few reasons you may want to change your business structure. Consider if making a move would benefit your situation and then know how to make a move legally. In the long run, this will likely help your business continue to grow and succeed.