Starting a new business can be an exciting time. It is an opportunity to choose your future and impact your community.
Guam may seem like an incredible option as you look at your potential markets. When it is time to move forward, you must choose a classification for your business.
Here’s what you should know about the options for structuring your business and how that impacts the steps you need to take before you open your business.
License and classification are different
While getting your license from Guam’s Department of Revenue and Taxation is essential, if you choose a classification other than “sole proprietorship,” you will need to register your business before you seek a license.
For most classifications, registration and licensure are two different steps.
Before looking at the different classification options, you may want to consider your business and personal finances to determine what you need. Some classifications can provide some protections for your personal property and assets if there is a problem with your business.
As you look at your new company, you should consider the potential tax impact and liability to decide what classification will support your needs. In some cases, your business’s classification can protect your personal assets if your company experiences a legal liability or financial difficulty.
When you look at a sole proprietorship or a simple partnership, you will likely have lower startup costs. Still, you will have greater liability for the actions and debts of the business.
You may want to consider a corporation if you want more protection from legal actions and potential debts. However, C and S corporations have a significantly different tax burden than a sole proprietorship or a simple partnership. C and S corporations can also be more complex when you are learning how to coordinate your business’s taxes, shares and other paperwork.
Finally, LLCs and LLPs can often be a classification option that gives some of the benefits of a corporation without some of their restrictions and challenges. However, you will need to see what options are available in your jurisdiction.
There are many nuances to starting a business regardless of your chosen location. For many companies, Guam can be an exciting option.