How to Pick the Right Business Entity Type

Which Business Type is Right for You?

One of the fundamental initial decisions a new business owner faces is choosing the type of business entity that will be best for the business.

In choosing the most appropriate form of organization, a new Minnesota business owner will want to consider a variety of factors. These factors can be separated between tax and non-tax considerations.

The following posts help describe the pros and cons of:


Non-Tax Considerations:

  1. complexity and expense of organizing the business;
  2. liability of the business owner;
  3. distribution of profits and losses;
  4. management control and decision making;
  5. financing startup and operation of the business;
  6. transferability of ownership interest;
  7. continuity of the business entity following withdrawal or death of an owner;
  8. complexity and expense of terminating or reorganizing the business;
  9. extent of governmental regulation.

Tax Considerations:

  1. Who is the Taxpayer?
  2. What Tax Forms Are Used?
  3. Tax Rates
  4. Tax Impact
  5. Selection of the Tax Year
  6. Compensation for Services
  7. Employment Taxes and Workers’ Compensation Insurance
  8. Employee Retirement Benefit Plans
  9. Fringe Benefits
  10. Capital Gains and Losses
  11. Net Operating Loss
  12. Estimated Tax Payments
  13. Disposition of Ownership Interest

The material contained in these posts been adopted or copied from materials entitled A Guide to Starting a Business in Minnesota, drafted by the Minnesota Department of Employment and Economic Development’s Minnesota Small Business Assistance Office.

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