The Alabama Road Builder - Summer 2016 - 18

ALDOT Steps to Changing Your Business Structure By Mariama Bramble T here are many reasons to consider a business structure change. With a different business structure, would your business be more successful? Could your sole proprietorship or partnership use more liability protection? Do you want to avoid excessive fees and bookkeeping requirements for your LLC or corporation? If your answer to any of these questions is yes you may want to reconsider your business structure. If you are considering a change to your business structure, be sure to understand all of your options and weigh the pros and cons of a switch. 1 ASSESS YOUR OPTIONS 2 THINGS TO CONSIDER Your business structure determines the amount of regulatory paperwork you have to file, your personal liability for business decisions and how you are taxed on your business income. Sole proprietorships, partnerships, limited liability companies, and corporations are examples of popular business structures. It is important have an understanding of each before you make the decision to change your current structure. Businesses typically change their legal structure because of a change in business need. That might mean a need for more or different business liability, growth in your business, etc. Sole proprietorships and partnerships enjoy simple management and operations. LLCs and corporations enjoy limited liability to their personal assets. If you are considering a switch, first reassess the pros and cons of your current business structure and weigh the importance of the following five characteristics to your business: * Liability * Taxation * Fees and Forms * Investment Needs * Operational Continuity 18 3 WHAT TO EXPECT: Changes in Business Operations From Sole Proprietorship or Partnership to LLC or Corporation If you (and your partner) make the decision to change your business structure, your business will change from unlimited personal liability to limited. Expect to file more paperwork, including your articles of incorporation and bylaws. Fees and expenses will also increase. From a LLC or Corporation to Sole Proprietorship or Partnership Changing from an LLC or corporation to a sole proprietorship or partnership is more difficult. If you own a corporation, you must first convince shareholders to get on board with the plan and liquidate your business assets. As an LLC, you only will see changes in your tax obligations if you file as a corporation. You will need to adhere to specific state policies like licensing requirements and inform the IRS to the change, as your filing requirements will change. 4 NEXT STEPS * File a DBA with your government agency: www.sba.gov/starting-business choose-register-your-business/register-your-business-name * Register with the IRS. You will most likely need to apply for a new Employer Identification Number (EIN): https://www.sba.gov/ starting-business/filing-paying-taxes/obtain-your-federal-business-tax-id * Register with Local and State Agencies. * Reapply for Licenses. Some states require you to reapply for licenses when your business structure changes: https://www.sba.gov/starting-business/ business-licenses-permits * Notify your bank and insurance company of the change. Your bank may require you to transfer assets. Also, make sure you inform everyone you do business with, including suppliers, customers and employees, if the change affects them in any way. ❏ This article appeared on www.SBA.gov/blogs and has been reprinted by permission. www.alrba.org http://www.sba.gov/starting-busi https://www.sba.gov/ https://www.sba.gov/starting-business/business-licenses-permits http://www.SBA.gov/blogs http://www.alrba.org

Table of Contents for the Digital Edition of The Alabama Road Builder - Summer 2016

INDEX TO ADVERTISERS/ADVERTISERS.COM
EXECUTIVE DIRECTOR’S MESSAGE
PRESIDENT’S MESSAGE
HOW BUSINESSES CAN PREPARE FOR THE NEW OVERTIME RULE
SPRING FLING 2016 HIGHLIGHTS
ENGAGING OUR NEXT GENERATION OF INDUSTRY LEADERS
4 STEPS TO CHANGING YOUR BUSINESS STRUCTURE
5 WAYS TO BUILD TRUST IN A BUSINESS
ARTBA
MEMBER PROFILE
PRODUCTS AND SERVICES MARKETPLACE
HEARD ALONG THE HIGHWAY

The Alabama Road Builder - Summer 2016

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