Many entrepreneurs have very little time to invest in learning the pros and cons of specific business structures when they first incorporate their company yet understand them as they interact with others in the corporate world. It’s not uncommon for business owners to want to shift to a different corporate structure from the one they initially set up to expand their knowledge about other options. Many entrepreneurs are unclear as to whether this is possible, though.
Is it possible to change a company’s incorporation structure?
You can change your business formation from a sole proprietorship to a limited liability company (LLC) or a partnership to an S-corporation or virtually any other structure if you desire. You may want to learn more about the different business formations to ensure that it will carry you into the future, though.
What are the pros and cons of different corporate structures?
Many entrepreneurs initially operate as sole proprietors because it’s relatively affordable and straightforward to set up as the company and owner are the same. Sole proprietorships don’t offer any built-in liability protection, though. You could lose everything if someone sued you.
An LLC is a popular incorporation structure because it does have built-in personal liability protection. Many LLC owners appreciate how it has a pass-through tax filing structure as well. Many entrepreneurs looking to go into business with one another create a partnership, however. This business structure doesn’t afford business partners any personal liability protection, meaning that a plaintiff can sue one partner for another’s actions or debts.
Business owners looking to join forces with other entrepreneurs while enjoying the liability protection that an LLC affords often set up an S-corp. One benefit associated with this structure is that tax authorities only tax net profits once. It happens at the shareholder level.
How should I go about changing my company’s incorporation structure?
One of the first steps you’ll want to take when changing your Atlanta company’s business structure is to file an Article of Amendment with the Georgia Secretary of State. You may also need to submit an Article of Conversion and Articles of Incorporation as part of this process.
A small business formation attorney can help you decide what structure is right for your business and then help walk you through the steps to switch its structure here in Georgia.