You’ve made a big decision: You’re going to launch your own business. It can be both exciting and daunting to become your own boss, but you’re not alone. In recent years, there has been a substantial increase in new business starts, with millions of people going out on their own to open stores and restaurants, launch products, or provide professional services.1
One of the first steps you’ll need to take is deciding what type of legal business structure you’ll choose for your new venture. This decision will impact what you pay in taxes, how you can raise money, and your personal liability exposure. For some types of small businesses, establishing a limited liability company—or LLC—may be the best option. You should consult with qualified legal counsel and tax advisors early in the process to help you determine the best legal entity for your situation.
Answering a few key questions in consultation with your legal counsel and tax advisors can help you refine plans for your business—and determine what types of structures might be appropriate:
Once you’ve answered the questions above, you’ll be in a stronger position to decide about what business structure to choose. There are various options that may be available depending on your circumstances and state of residence, but here are several options that your legal counsel and tax advisors are likely to recommend:
Once you’ve decided on your type of business structure in consultation with your legal counsel and tax advisors, consider taking the following steps to move forward:
When making key business decisions, as well as operating your business on a day-to-day basis, you can benefit from the guidance and services of trusted advisors, including an attorney, an accountant, and an insurance agent and broker. When you start your business, these specialists can help you weigh the pros and cons of different business structures and should be consulted as one of your first steps in considering options for setting up a business.
Your team of advisors can also provide assistance when you take important early steps for your business such as filing paperwork with your state government and the IRS, setting up a payroll system, and obtaining the right insurance coverage for your type of business. The U.S. Small Business Administration also maintains a network of local resources that can help business owners with with financing, marketing, and other operations.
This document is advisory in nature and is offered as a resource to be used together with your professional insurance advisors in maintaining a loss prevention program. It is an overview only, and is not intended as a substitute for consultation with your insurance broker, or for legal, engineering or other professional advice.
Chubb is the marketing name used to refer to subsidiaries of Chubb Limited providing insurance and related services. For a list of these subsidiaries, please visit our website at www.chubb.com. Insurance provided by ACE American Insurance Company and its U.S. based Chubb underwriting company affiliates. All products may not be available in all states. This communication contains product summaries only. Coverage is subject to the language of the policies as actually issued. Surplus lines insurance sold only through licensed surplus lines producers. Chubb, 202 Hall's Mill Road, Whitehouse Station, NJ 08889-1600.
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