Choosing a Legal Structure for Your Restaurant

When starting your restaurant, the first thing you will need to do is choose the legal structure of your business. What kind of business do you want to own? Your decision will determine the taxes you pay, your personal liabilities, and your ability to gain funds.  You can register your restaurant as one of the following types of business entities:

• A sole proprietorship is a legal entity in which an individual and his or her business are considered a single entity for tax and liability purposes. In other words, the owner is personally liable for all debts incurred by the business and files their own personal taxes.
• A corporation is an independent legal entity owned by shareholders. This means that the corporation itself, not the shareholders that own it, are responsible for any liabilities, taxes and obligations of the business.
• Partnership is a legal entity that has two or more owners who are personally and jointly liable for the obligations of the business.
• A limited liability company (LLC) is a legal enterprise that blends element of a partnership and a corporation. The owners of a LLC,  called “members,”  have limited liability from obligations of the business; they are only liable for the amount they have invested.