Hello Genius, welcome back to another episode of the Own Your Genius podcast—the space where we encourage you to use your education and experiences to create dope businesses. I’m your host, Brand Attorney LaConya Murray, owner of Off the Mark IP Solutions and founder of MARKEDlegal. Today, we’re diving into a topic that can make or break your growth: Is your business structure helping you move forward, or is it quietly holding you back?
Recognizing the Signs: Is Your Structure Holding You Back?
So, how do you know if your business structure is actually slowing you down? Let’s talk about a few warning signs:
- Tax Surprises: Are you shocked by a big tax bill, or feeling like you’re paying more than you should? Your structure might not be optimized for your income and expenses.
- Stalled Growth: Is it hard to bring on a partner, hire employees, or attract investors? Some structures can make these steps unnecessarily complicated.
- Limited Credibility: Do clients, collaborators, or lenders hesitate to work with you because your business seems “too small” or informal?
- Personal Risk: Are you losing sleep over the thought of your personal assets being at risk if something goes wrong?
- Administrative Frustration: Are you overwhelmed by paperwork or struggling to keep up with compliance requirements?
I’ve seen entrepreneurs build amazing brands, only to hit a wall when they try to secure funding—or realize too late that their personal savings are exposed to business debts. These are not just headaches; they’re red flags that your structure may need a serious look.
Common Mistakes When Choosing a Structure
Let’s clear up some common pitfalls entrepreneurs face:
- Choosing What’s Easiest: Many start as a sole proprietor because it’s simple, but overlook the risks involved.
- Ignoring Future Plans: Picking a structure for “right now” without thinking about where you want your business to go.
- Assuming One Size Fits All: Just because an LLC worked for your friend doesn’t mean it’s right for you.
- Neglecting Professional Advice: Skipping conversations with attorneys or accountants who can help you see the bigger picture.
- Putting Off Re-Evaluation: Your business grows and shifts, but your structure stays stuck in the past.
How Structure Impacts Funding, Hiring, and Partnerships
Let’s get practical. Your business structure isn’t just about taxes and paperwork—it has a big impact on:
- Funding: Investors often prefer LLCs, S Corps, or C Corps, as these structures offer more formality and protection. Sole proprietorships can be a red flag for serious funders.
- Hiring: Certain structures make it easier to set up payroll, offer benefits, and stay compliant with employment laws.
- Working with Partners: Bringing on a partner or co-founder? LLCs and corporations allow for shared ownership and clear agreements. Sole proprietorships don’t.
- Credibility: Clients and collaborators often feel more confident working with a business that sounds established—think “LLC” or “Inc.”—because it signals legitimacy and seriousness.
Key Questions to Ask Before Choosing or Changing
Before you pick—or change—your structure, ask yourself:
- What are my long-term goals for this business?
- How comfortable am I with personal financial risk?
- Do I plan to seek outside funding or bring on partners?
- How important is it to build credibility with clients, lenders, or investors?
- How much time and energy can I realistically spend on compliance and paperwork?
- What are my current and expected profits, and how will taxes impact those earnings?
- Is my industry subject to specific legal or regulatory requirements?
Reflecting on these questions can help you avoid costly mistakes and choose a structure that fits your reality—not just the status quo.
How Difficult Is It to Change Structures?
If you’re realizing your current setup isn’t right, you’re not stuck forever! Changing your business structure is possible, but the process varies:
- Sole Proprietor to LLC: Usually straightforward—register with your state, update tax information, and notify banks and clients.
- LLC to Corporation: Involves more paperwork and possible tax implications, but still doable with the right guidance.
- Changing Ownership Structure: Bringing on partners or investors? You’ll need new agreements and possibly new registrations.
The key: plan ahead, get professional advice, and make sure you update all your records—licenses, contracts, bank accounts—so your business transition is smooth. It’s extra work, but the benefits are often well worth it.
How Often to Review Your Structure
Your business isn’t static, and your structure shouldn’t be either. Here’s when you should stop and review:
- At least once a year—make it part of your annual business checkup.
- Whenever you hit a major milestone: launching a new product, entering a partnership, raising capital, or expanding to a new state.
- If you experience rapid growth, or your revenue and team are scaling quickly.
- Before or after major legal, tax, or regulatory changes.
Remember: proactive reviews keep you protected and positioned for the next stage of growth.
Closing Thoughts
Your business structure is more than a formality—it’s the foundation for your growth, your protection, and your peace of mind. Take the time to make a choice that truly supports where you want to go, and don’t let the wrong structure hold you back from owning your genius. If this episode sparked questions or gave you clarity, share it with a fellow entrepreneur, leave us a review, and subscribe. Until next time—keep building your business, growing your brand and owning your genius!
