Starting a computer business is an exciting and scary adventure.  Extensive planning is necessary when starting a computer business.  One of the first steps when starting a computer business is to select a business structure.

Each kind of structure offers advantages and disadvantages.  Choose the structure that best fits your particular business.

Business Structures

Selecting a business structure is a vital component to starting a computer business.  Prospective owners should consider a sole proprietorship, a partnership, a corporation, or a limited liability corporation.  One deciding factor will be taxes.  The IRS, local government, and the federal government will treat businesses differently based on their legal structure.

Sole Proprietorship

A sole proprietorship makes starting a computer business relatively easy.  All that is needed is a business license.  One person typically owns it.  However, liability can become an issue.  If a sole proprietorship is sued, the owner’s personal assets are at risk.  All debts become his responsibility, as well. 

Partnership

A partnership is the association of two or more people working as co-owners of a business.  If two or more people are starting a computer business together, this may be a viable option.  An Article of Partnership will need to be drafted.  It should state the names of the partners and the responsibilities of each.

Often, the talents of more than one partner will improve a business.  However, should one partner suddenly leave town, the other partner is legally liable for all debt. 

Corporation

A corporation is organized through the government of the state where a business is located.  Incorporation papers and capital stock are issued in the company.  One huge advantage to a corporation is the limited liability in case of a lawsuit.

It is also easy to sell the business through the transfer of stocks.  Before starting a computer business, consider the start-up expenses as well as the double taxation a corporation incurs.

Limited Liability Company (LLC)

The limited liability company is a fairly new business structure.  An LLC has the tax advantages of a partnership but the limited personal liability of a corporation.  Selecting an LLC may be the right fit when starting a computer business. 

Before starting a computer business, consult an attorney or accountant to determine which business structure will best suit the company’s needs. Be familiar with all structures.  It is possible that the need may arise to change the business structure in the future.

The Bottom Line about Starting a Computer Business

In this article, you’ve learned more about starting a computer business. To learn more about starting a computer business, click here now to get access to a free one-hour audio training program on 5 Easy Ways to Grow Your Computer Consulting Business.