Technology and Health & Life Sciences
Considerations for Tech Entrepreneurs
So, you are starting a new technology or bio science company, and don’t know what type of business entity to use. Unless you are a serial entrepreneur, this might be an overlooked and frustrating task. However, the decision you make today will have a long-term effect on your business, and is critical to consider early on in forming your business.
Selecting the right business legal entity in the technology space will be valuable in helping you achieve your goals. Considerations that you may not have thought about include the impact of tax implications the entity you select will have on your company and business partners. In addition, when looking for investment partners to raise capital, you need to think about the scalability of your business, currently and in the future. International growth may also be an area for consideration, as there are many different advantages if you carefully plan potential global strategies when setting up your business entity.
Don’t forget to consider the personal liability you are willing to assume with certain types of business entities. Some types of business selections may hold the owner personally responsible for the debts and obligations of the business.
Now that we have your attention, you are probably wondering how to make this decision. It starts with speaking to your circle of trusted advisors. Just as Cherry Bekaert knows you have put a great deal of time and energy in building the innovative ideas for your technology company, you need to include a variety of partners (i.e. your attorney, accountant, business partners, and other like-type tech company owners) in making your decision. It is not recommended to select your business type by only speaking with a single individual, as these additional resources will probe into areas of their assigned expertise and may offer insight you had not yet considered.
To learn more about details of different types of entities, please visit entrepreneur.com for a guide on the basics of different business structures.
It is possible to switch entity types, but depending on which kind of company you formed, there may be certain consequences that should be explored before doing so.
Cherry Bekaert works with hundreds of innovative high tech, bioscience, and health IT companies, including startups and advanced staged, public companies. Please contact our Technology & Life Sciences team if you would like to learn more about which business entity might be right for you.