Structure selection is complex. Multiple scenarios. Multiple tradeoffs. Multiple options.
Most guides are static. They don’t adapt to your situation. They don’t show scenarios.
Structure selector shows scenarios. Different situations. Different tradeoffs. Different recommendations.
This guide walks through scenarios, tradeoffs, and recommended next steps.
Key Takeaways
- Explore scenarios—see different situations
- Understand tradeoffs—weigh pros and cons
- Get recommendations—see suggested structures
- Follow next steps—take action
- Make decision—choose your structure
Table of Contents
Scenario Exploration
Explore different scenarios. See how structure fits each.
Solo Founder Scenario
Solo founder starting business:
- One owner
- Simple operations
- Low risk
- Growth potential
Recommended structure: LLC for simplicity and protection.
Why this matters: Scenario exploration shows fit. If you explore scenarios, fit becomes clear.
Partnership Scenario
Multiple founders starting business:
- Multiple owners
- Shared responsibility
- Collaboration needed
- Growth plans
Recommended structure: LLC or Partnership depending on protection needs.
Why this matters: Scenario exploration shows options. If you explore scenarios, options become clear.
Growth-Focused Scenario
Business planning to raise capital:
- Investor interest
- Stock options needed
- Growth focus
- Scaling plans
Recommended structure: Corporation for investor structure.
Why this matters: Scenario exploration shows growth needs. If you explore scenarios, needs become clear.
Pro tip: Use our TAM Calculator to evaluate market opportunity and inform business structure decisions. Calculate market size to understand growth potential.
Tradeoff Analysis
Analyze tradeoffs. Understand pros and cons.
Simplicity vs. Protection
Tradeoff:
- Simplicity: Partnership is simplest
- Protection: LLC provides protection
- Balance: LLC balances both
Why this matters: Tradeoff analysis shows choices. If you analyze tradeoffs, choices become clear.
Cost vs. Benefits
Tradeoff:
- Cost: Partnership is cheapest
- Benefits: Corporation offers most benefits
- Balance: LLC offers good balance
Why this matters: Tradeoff analysis shows value. If you analyze tradeoffs, value becomes clear.
Flexibility vs. Structure
Tradeoff:
- Flexibility: LLC is flexible
- Structure: Corporation is structured
- Balance: Choose based on needs
Why this matters: Tradeoff analysis shows priorities. If you analyze tradeoffs, priorities become clear.
Recommendation Framework
Use framework to get recommendations.
Assess Your Situation
Evaluate your situation:
- Number of owners
- Growth plans
- Capital needs
- Risk tolerance
Why this matters: Situation assessment shows context. If you assess situation, context becomes clear.
Match to Structure
Match situation to structure:
- Solo + Simple = LLC
- Multiple + Growth = Corporation
- Multiple + Simple = Partnership or LLC
Why this matters: Structure matching creates fit. If you match structure, fit improves.
Get Recommendation
Receive structure recommendation:
- Based on assessment
- Matched to situation
- Considered tradeoffs
- Recommended structure
Why this matters: Recommendation enables decision. If you get recommendation, decision improves.
Next Steps Guide
Follow next steps after selection. Take action.
Immediate Steps
Take immediate steps:
- Choose structure
- Gather information
- Prepare documents
- Plan formation
Why this matters: Immediate steps enable action. If you take steps, action becomes possible.
Formation Steps
Complete formation steps:
- File paperwork
- Pay fees
- Obtain EIN
- Create agreements
Why this matters: Formation steps create business. If you complete steps, business is created.
Post-Formation Steps
Complete post-formation steps:
- Open bank account
- Update contracts
- Set up compliance
- Maintain records
Why this matters: Post-formation steps maintain business. If you complete steps, business maintains.
Decision Support
Get support for your decision. Make informed choice.
Decision Factors
Consider decision factors:
- Your situation
- Your goals
- Your resources
- Your timeline
Why this matters: Factor consideration enables decision. If you consider factors, decision improves.
Decision Confidence
Build decision confidence:
- Understand options
- Evaluate tradeoffs
- Get recommendations
- Make informed choice
Why this matters: Confidence enables action. If you build confidence, action becomes possible.
Pro tip: Use our TAM Calculator to evaluate market opportunity and inform business structure decisions. Calculate market size to understand growth potential.
Your Next Steps
Structure selector guides your decision. Explore scenarios, understand tradeoffs, get recommendations, follow next steps, then make decision to choose your structure.
This Week:
- Begin exploring scenarios using our TAM Calculator
- Start analyzing tradeoffs
- Begin getting recommendations
- Start planning next steps
This Month:
- Complete scenario exploration
- Make structure decision
- Begin formation process
- Complete post-formation steps
Going Forward:
- Continuously evaluate structure fit
- Consider changes as you grow
- Maintain compliance
- Optimize structure over time
Need help? Check out our TAM Calculator for market evaluation, our structure comparison guide for basics, our structure examples guide for examples, and our upgrade guide for transitions.
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FAQs - Frequently Asked Questions About Interactive Business Structure Selector: Scenarios, Tradeoffs, and Recommended N
What business structure does the selector recommend for a solo founder with simple operations?
An LLC is recommended for solo founders because it offers simplicity and personal liability protection.
Learn More...
For the solo founder scenario with one owner, simple operations, low risk, and growth potential, the selector recommends an LLC. This structure provides the right balance of simplicity in management and operations while still offering personal liability protection. It avoids the administrative complexity of a corporation while giving you more protection than a sole proprietorship.
When should a business choose a Corporation over an LLC according to the selector?
Choose a Corporation when you plan to raise capital from investors or need to offer stock options.
Learn More...
The growth-focused scenario recommends a Corporation for businesses planning to raise capital. Corporations are better suited when you have investor interest, need to issue stock options to attract talent, are focused on aggressive growth, and have scaling plans. Corporations provide the formal structure investors expect, including defined share classes and established governance frameworks.
What are the key tradeoffs between simplicity, cost, and protection when choosing a structure?
Partnerships are simplest and cheapest but least protected while Corporations offer the most benefits but cost the most and LLCs balance all three.
Learn More...
The article analyzes three major tradeoffs: Simplicity vs Protection (partnerships are simplest but LLCs add protection), Cost vs Benefits (partnerships are cheapest, corporations offer the most benefits, LLCs offer a good balance), and Flexibility vs Structure (LLCs provide more operational flexibility while corporations provide more formal structure). The right choice depends on which factors matter most to your specific situation.
What formation steps should you take immediately after choosing your business structure?
File paperwork, pay fees, obtain an EIN, and create operating or partnership agreements.
Learn More...
The article outlines three phases of action: immediate steps (choose structure, gather information, prepare documents, plan formation), formation steps (file paperwork with the state, pay required fees, obtain your EIN from the IRS, create operating agreements or bylaws), and post-formation steps (open a business bank account, update contracts, set up compliance tracking, and begin maintaining proper records).
How does the recommendation framework match your situation to the right structure?
It evaluates number of owners, growth plans, capital needs, and risk tolerance, then matches to the best fit.
Learn More...
The framework uses a simple matching system: Solo owner plus simple operations equals LLC, multiple owners plus growth plans equals Corporation, and multiple owners plus simple needs equals Partnership or LLC. The process involves three steps: assess your situation (number of owners, growth plans, capital needs, risk tolerance), match your situation to a structure using the criteria above, and receive a recommendation that considers the tradeoffs most relevant to your circumstances.
Should you reassess your business structure as your company grows?
Yes, continuously evaluate structure fit and consider changes as your business grows and needs evolve.
Learn More...
The article recommends ongoing structure evaluation as part of your long-term planning. What works at startup may not work at scale. For example, a solo founder LLC may need to convert to a Corporation if they later seek venture capital. The going-forward plan includes continuously evaluating structure fit, considering changes as you grow, maintaining compliance with your current structure, and optimizing your structure over time to match evolving business needs.
Sources & Additional Information
This guide provides general information about business structure selection. Your specific situation may require different considerations.
For market size analysis, see our TAM Calculator.
Consult with professionals for advice specific to your situation.
