J. Anthony Allen explains what business entities are and why picking the right one matters for a startup. Your choice isn't permanent; you can change structures as you grow, though you'll need lawyers and accountants to help with the switch.
Okay, in this next section we're going to talk about types of business entities. What this means is you've seen before Inc, right? So you see like Coca Cola Inc. That's short for incorporated and that means it's a certain type of business. You might have seen something like Microsoft Corporation. And that corporation part of it means it's a certain type of business. Different businesses have form under different types. So this is kind of the legal entity. We sometimes call this just the legal form of business. This means what type of business you are putting together. The rules of your company is another way to think about it. So there are a bunch of different types and we're going to go over all of them in this section. Well, we're going to go over most of them in this section. There are some, like really obscure ones that we won't spend much time on. And then at the end of this section, I'll kind of tell you what, in like 95% of cases, what you should do. But I want to wait and tell that to you after we go through them because I want you to try to figure out, figure it out. So think about all the different types of businesses and think about what's going to work best for your business. And then at the end I'll tell you what I do with my businesses and what is generally the most common way that small businesses start up. One thing that I'll point out now and I'll probably repoint out again, is that choosing the right one is important, but it's not final. There are things you can do to transition your business from one to the other, and that's fairly common. You might start off as a business entity that has certain restrictions or certain limitations, but then you've grown to the size that you think, okay, like those restrictions are problematic now and I need to transition to a new kind of business entity. You can totally do that. There are ways to transition one to the other, but they probably almost always require a lawyer or an accountant to help you do. Probably both actually. So choosing the right one from the get go will save you a little bit of money in dealing with a lawyer and an accountant and an advisor, however, and I'll talk about this more in a second, you should still have those handy, those people handy. But okay, let's dive into what kind of separates these and then we'll go into each. Each one.
