How To Choose The Right Company Structure For Your Business

Finding the right business structure can be a challenge, particularly for novice entrepreneurs. Most businesses fail within the first year of operation, with ineffective business planning being one of the most common reasons. You will need to think about your business’s financial needs, growth potential, and risks of each type of business structure. The framework you adopt will certainly go a long way to determining the future of your business. Here are some tips worth noting when deciding which company structure is right for your business.

Complexities of your business operations

If you are looking for a simple, uncomplicated business structure, a sole proprietorship is the best choice. All you have to do is register your name, run your business, report all income and profits, and pay your taxes. However, you might have difficulty getting funding from investors as a sole proprietor. If you intend for your business to run on grants and funding, you will need a partnership or a limited liability company structure. 

Business operation licenses and permits

Once you decide which type of structure you would like your business to have, you must familiarise yourself with the specific type of business permits and licenses accompanying the structure. Depending on the type of business you want to operate, you might need to be licensed locally or nationally. In choosing your structure, ensure that you know the type of regulations involved in running your business and the type of industry you’re entering.


What vision do you have for your company, and which business structure best supports your growth type? These are important questions you must ask yourself when deciding on your business’s legal and operating structure. You must turn to your business plan to review the strategies you have in place for your business’s growth. Your business structure should be able to accommodate expansion possibilities. 


If you want total control of your business, including its activities, a sole proprietorship might be a better option. In a limited liability business setup with shareholders or in a partnership framework, you can negotiate control. However, it will not be 100% yours. You can control a corporation at its inception level; however, you will need a board of directors to make crucial decisions as it expands. 

Business model

When starting a business, you must understand the problem or gap you are trying to fill for your customers. A business model spells out how you plan on delivering your products or services to potential customers at a reasonable cost. The type of business structure you select should support your desired business model. For example, if you are looking to get into franchising for the first time, most franchisors will allow you to choose your business structure. However, most franchisees tend to be limited companies. 

If you are interested in exploring franchising, online directories such as Franchise Direct for more information on franchises up for sale at affordable prices. 

Your choice of business structure is extremely important in the success of your business. Before registering your business, ensure you understand all the legalities and requirements of establishing a sole proprietorship, partnership, or limited liability company.


Contact Us

Give us a call or drop our team an email and we will contact you. We endeavour to answer all inquiries within 24 hours during business days.