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Which Entity is Right for Your Retail Business This Year

Should I bring in partners? Who will be my suppliers? What prices will I charge? These are just a few of the daunting questions you’ll ask yourself when establishing a retail business.

Another critical decision you’ll make is choosing the best entity to start your retail business. And there’s no one-size-fits-all answer. Let’s look at what the most popular business entities offer.

Sole Proprietorship

Are you starting a retail business on your own? A Sole Proprietorship could be a great fit. There is no legal structure involved. 

However, you’ll not have the flexibility to create a franchise. You can only open multiple branches of your retail business.


  • Easy to form and maintain with very little paperwork
  • You don’t pay corporate taxes
  • You’re not restricted by a formal business structure. There are no requirements like annual reports and filings


  • No liability protection, which means your personal assets can cover business liabilities

Limited Liability Company (LLC)

If the thought of losing your personal assets to pay business debts scares you, a Limited Liability Company is the best option for you.

Income from the retail business will pass through to your personal income tax returns, which means there are no corporate taxes.

However, you’ll still need to pay a self-employment tax. Research the best state to form an LLC to avoid extra tax expenses.


  • You can operate a franchise
  • You get liability protection. Personal assets are shielded from business debts unless you personally guaranteed a loan
  • You create a legal structure for your retail business without getting involved in too much paperwork


  • An LLC cannot issue shares 


If you’re looking for the ultimate business structure that’ll give strong liability protection and ease of growth, go for a Corporation.

You can operate a franchise with ease and raise funds to grow your business. Brace yourself, however, for a complex formation process and high corporate taxes.


  • Helps you establish a strong power and management structure
  • You can offer stock and stock options to employees, which attracts top talent to your retail business
  • Make sit easy to attract high-value investors by issuing stock


  • You’re required to hold annual general meetings, have comprehensive records, and other mandatory requirements to run a Corporation

Choose the Best Entity for Your Retail Business

There you have it, the three most popular business entities. Assess the features, pros, and cons of each against the needs of your retail business and make an informed choice.

Check out this infographic from GovDocFiling.com for more details.


Author Bio:


Brett Shapiro is a co-owner of GovDocFiling. He had an entrepreneurial spirit since he was young. He started GovDocFiling, a simple resource center that takes care of the mundane, yet critical, formation documentation for any new business entity.

Uneeb Khan
Uneeb Khan
Uneeb Khan CEO at blogili.com. Have 4 years of experience in the websites field. Uneeb Khan is the premier and most trustworthy informer for technology, telecom, business, auto news, games review in World.

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