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How to choose the right business structure for your company

On Behalf of | Sep 1, 2022 | Business Law

People starting businesses in Kentucky are usually concerned mainly about the product or service the company will be providing to the customers and clients. They also may be networking and marketing to find clients, customers and investors for the company. This is generally what the owners know best and it is usually why they decide to start the company in the first place.

There are other important considerations for business owners as they start their companies. One of them is the legal business entity format that the company will use. There are many options for business owners to choose from and it is important to know the differences between the various business structures to know what will work best for your company.

Different options for business structures

Partnerships are fairly simple and may be a good option when there are relatively few people with ownership interests in the company. There are different types of partnerships as well, but limited liability partnerships can protect one partner from liability from the actions of other partners

Limited liability companies (LLC) are popular options because they combine partnerships and corporations. There are no shareholders in LLCs. Instead, they are owned by the members of the LLC. However, similarly to corporations, LLCs protect the members from individual liability for the debts and lawsuits against the company.


Corporations are generally owned by shareholders who may or may not have a position within the company. People can own shares and have ownership interests in the company without actually having anything to do with the operations of the company. Generally, there is also a board of directors who have the final say in how the company is run.

There are two main types of corporations. The difference between the two is how the corporation will be taxed. S-corps pass the profits and losses onto the owners who will report them on their individual tax returns. C-corps will file a separate tax return just for the corporation and their individual tax returns will only reflect the income they were paid as an employee.

Companies in Kentucky have other options other than the ones listed above as well. Business owners need to know their companies’ size and ambitions to generally know the right business structure. Experienced attorneys understand the various options and may be able to help guide you through the process of choosing the right one for your company.