Choosing the legal structure of your company is a crucial step in beginning a business. Your business structure impacts numerous areas of your business. Risk, taxation, and complexity are three of the important factors to consider as you choose the business structure for your company.
Even if you consulted a South Carolina business organization lawyer when you organized and set up your business, it could be time to reassess your business structure. Changes in circumstances and the evolution of your business may make it necessary to change your business structure. Your initial business structure may have worked for you when you opened your business, but that does not mean that another structure is not necessary or better for your company now and in the future.
Common Reasons to Reassess Your Business Structure
There are a number of reasons why you may want to re-evaluate and change your business structure. Some of the common reasons include:
Liability and Risk Protection — Some legal business entities provide a higher level of personal liability protection. Many small businesses and family-owned business begin as sole proprietorships. Changing to another business structure can provide more protection for owners from personal liability for business debts and obligations.
Tax Considerations — Changing the structure of your business can make a substantial difference in the amount of taxes you pay. When you began your business, you may not have earned a large profit. As your business grows and increases revenues, you may need to change the business structure to lessen your tax burden.
Hiring Employees — The decision to hire employees has numerous implications for your business. The complexity and liability of your business changes as you hire employees. You may want to consider a different business structure that reduces your risk and can make dealing with various employee-related issues easier.
Change of Ownership or Management — If you purchase a business or you sell a portion of your business, you need to review the business structure. You may need to change the structure to meet your needs and goals after the change in ownership. Likewise, a change in management, such as retaining a business partner, may also require a change in business structure.
Business Growth and Financial Reasons — It is wonderful when your business outgrows its business structure. If your business has expanded operations or experienced a sudden and substantial increase in profitability, a change in business structure might be warranted.
Downsizing or Economic Downturn — As with a sudden increase in profits or business growth, an economic downturn or downsizing your business may require a change in the business structure. If your company is not handling the same level of business, you may want to choose a business structure that is not as complex to simply the requirements for operating the business.
Using a South Carolina Business Organization Lawyer To Change Business Structures
Schedule a consult with a member of our team at Willcox, Buyck & Williams, P.A. today. Our South Carolina business law lawyers can review your current business structure, your needs, and your goals to help you determine if you need to change your business structure. There are several legal issues that you need to consider before making any changes to the structure of your business. Let us help you ensure that you do not overlook any legal issue that could impact the change in business structure.