During the development phase of a new West Virginia company, there are many issues to resolve. Some issues have an impact on the overall function and operations within the company. Other issues affect the way one reports and files taxes, such as registering under one business structure as opposed to another. While it’s possible to change structures down the line if you determine another option would better serve your needs, it’s best to review all laws ahead of time to choose well and avoid having to do so.
Determining which business structure best fits your needs and goals as a West Virginia business owner is a top priority during the startup phase. There are several main structures to choose from, including a Limited Liability Company (LLC), sole proprietorship, partnership or corporation. If you do not register under a specific structure, the Internal Revenue Service (IRS) will consider you a sole proprietor.
The business structure you choose affects personal liability and taxes
Whether you have employees or operate your business alone, you can register as a corporation. This business structure has benefits that other structures do not have. As a corporation, your shareholders are not personally liable (beyond the amount of their investment) if someone sues your business. A corporation also has a perpetual lifespan, meaning a company continues to exist even if its founder dies.
A potential downside to registering as a corporation has to do with control of business operations. If you are the type of person who wants 100% control over your company, then you might want to explore other business structure options. In a corporation, a board of directors typically governs the business. Double taxation is another downside for corporations. A corporation must pay taxes on the profits it issues to shareholders, then shareholders pay taxes on their proceeds.
A corporation must have annual meetings
As a corporation owner in West Virginia, you’re required to hold annual meetings in accordance with established bylaws and record minutes at the meetings. Because a corporation can raise capital by selling stocks and issuing bonds, many people find the annual meeting requirement a minor inconvenience that is worthwhile.
Support is available for business structure issues
As the owner of a West Virginia corporation, you’re required to file articles of incorporation. This is a document that contains the name and purpose of your business, as well as information regarding stocks. The Secretary of State can provide the paperwork you need. You’ll also need to draft corporate bylaws, which you can best accomplish under guidance from a knowledgeable business law source.