Starting a Retail Business? Pick The Right Business Entity
Want to start a retail business? Great choice.
The retail sector is one the fastest-growing industries in the world. It is full of excellent business opportunities. As of 2022, there are nearly 2,920,421 retail businesses in the US.
However, starting a retail business requires careful planning. From finding the right location to keeping up with the latest industry trends, there are many things to keep in mind.
Another important thing to think about is taxes. Retail business owners may need to pay income tax, employment tax, property tax, and more.
Did you know that the business entity you choose for your retail business could directly impact your tax burden?
There are many different business entities to choose from, such as Sole Proprietorships, Corporations, LLCs, and more.
Which is the right one for your business?
Let’s find out.
If you want to start a retail business on a small scale, Sole Proprietorship may be the right choice. There is very little paperwork involved, and you also don’t need to pay corporate taxes.
However, if you want to expand your business, this may not be the right model for you as all the liability rests with you.
Limited Liability Corporation
Registering your retail business as an LLC protects you from business liability. Like a Sole Proprietorship, your income is also passed on as your personal income. This saves you from double taxation. And if you choose the best states to form an LLc formulation, you’ll get numerous other benefits as well.
However, starting an LLC requires more paperwork than Sole Proprietorships and you can’t raise funds with ease. This makes them ideal for medium-scale retail businesses.
If you’re looking for the best entity for starting a large retail business, we recommend Corporations. The reason is that Corporations give you the best liability protection.
Raising funds, scaling up your business, and distributing employee shares is also a lot easier. However, Corporations require a considerable amount of investment. Plus, you are subject to corporate taxes.
But the differences between the various business entities don’t end here. There’s a lot more that needs to be uncovered. To learn more about their differences, check out this infographic below by GovDocFiling.