How should an entrepreneur structure a new business? From determining your level of involvement to adopting innovative business structures, there are different ways you can structure your business for success.
Here are the top 3 tips for developing a new business structure:
#1. Determine Your Level Of Involvement
When structuring your new business, it is important to determine the level of involvement and control you would like to have in the business. Are you coming into business with a partner or family member? Do you want to be involved in all day-to-day operations? Do you want total control of the business? Answering these questions will help you decide if you want to structure your business as a C-Corporation and sole proprietorship or something like an Pty Ltd.
#2. Separate Intellectual Property And The Business Itself
When creating and structuring a new business, an entrepreneur should consider separating their intellectual property from the business itself. Structuring the business in this way protects valuable pieces of intellectual property that you don’t realize are that important until they try to get taken away in some kind of lawsuit.
Your company phone numbers and web address are two great examples of intellectual property that are worth protecting! If your company owns your telephone number or website address, a competitor could actually legally take over your phone number and website and benefit from your great reputation if you don’t structure your business in a way that would prevent that from happening if a lawsuit unfolds.
#3. When In Doubt, Go For A Pty Ltd
As long as you don’t plan to raise venture capital, when in doubt, simply start with a Pty Ltd. Pty Ltds are simple from an admin perspective, and they are easy to create. With a Pty Ltd, you can always elect to be taxed down the road, or, once your business really takes off, you can change into a new structure. The reality is, not all new businesses catch—so a Pty Ltd is a very simple and “good enough” way to get started right away that you can always update down the road.