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The type of company formation affects your business in every way

On Behalf of | Oct 22, 2021 | Business Law |

If you are about to launch your new construction company, what type of formation should you choose?

The decision is critical because it will affect every aspect of your business.

S and C corporations

If you are looking for more liability protection than a sole proprietorship affords, there are other options, such as a corporate structure. Keep in mind that taxes are due on both the income and dividends of a “C” corporation. On the other hand, the structure of the  “S” corporation is much the same as the “C,” but only the shareholders pay taxes. The corporation itself does not.


Some construction companies are partnerships. However, if this is the kind of structure that interests you be sure you have a written contract. Be clear on how the company will be run and who will be in charge so as to avoid future disputes.

Limited Liability Companies

Perhaps the most popular structure is the limited liability company or LLC. Like an “S” corporation, you have pass-through profit or loss and certain “C” corporation protections. Also, the members of the LLC are exempt from responsibility for any business issues that arise.

Making a choice

If your next step is the formation of your new construction company, think about how much liability you are willing to take on. Consider the overall tax picture. Also, think about your management style. Are you comfortable making decisions on your own or would you rather have a partner? Legal guidance will help you over the hurdles in your mind and enable you to make the right choice in launching your business.