Sooner or later, if you’re thinking of starting a business, you’ll need to decide what form it should take. Do you want to start a for-profit? A nonprofit? A cooperative? Wonder if an S Corp might be a better choice than a C Corp? Is a B Corp right for you? What’s the difference between an LLC and an L3C, anyway?
Understanding the myriad business structures available and choosing the best one for you can be a daunting task. To help make it easier, CLF Ventures and CLF, in partnership with Wholesome Wave, have published “How To Choose a Business Structure: A Decision Guide.” Written for the prospective or established business owner, this how-to guide will help farmers and entrepreneurs of food- and non-food ventures alike quickly get a handle on what business structure might work best for them. Anyone in any industry at any point in their business development can use the Guide. But it will be especially useful for emerging local food hubs, food enterprises, and farms which typically operate under slim profit margins, where issues like funding opportunities, personal liability, and taxation can determine whether an operation succeeds or fails.
The Guide features color-coded references, easy-to-read charts, and succinct explanations of the pros and cons of eight business structures, including sole proprietorships, general and limited partnerships, corporations (C Corps, S Corps, and B Corps), limited liability companies (LLCs) and low-profit limited liability companies (L3Cs), nonprofits, and cooperatives. For each business form, the Guide examines the advantages and disadvantages of the following critical factors and shows how each form stacks up against the others:
• Governance: management and control
• Risk and liability
• Life cycle
The Guide also explains how an organization can become a parent or subsidiary of another, and how to convert a nonprofit to a for-profit and vice versa. The last section walks business owners step-by-step through questions that help them determine what entity to form.
The Guide is also a valuable resource for farmers and food entrepreneurs participating in CLF’s newly launched pro bono Legal Services Food Hub. It can help new food enterprises determine what business form to take and help them better prepare for their first meeting with pro bono counsel. In conjunction with the Guide, the Legal Services Food Hub plans to present business-structuring workshops for farmers and food entrepreneurs in the future.
“How To Choose a Business Structure: A Decision Guide” is the latest resource created by CLF Ventures to help promote a thriving local food system for New England. Other resources include:
• the Municipal Food System Toolkit for MAPC Communities, created in conjunction with the Metropolitan Area Planning Council (MAPC) to help Massachusetts municipalities identify their food system priorities, assess the current state of their local systems, and implement projects that will improve the quality of life in their communities; and
• the New England Food Hub Site Suitability Analysis, created in conjunction with Wholesome Wave to identify optimal locations for regional fruit/vegetable and seafood food hubs based on both the products they sell and the kinds of activities they pursue. Utilizing Geographic Information Systems (GIS) technology, this Analysis is designed to inform state- and regional-level discussions among food entrepreneurs, investors, and policy makers about the development and placement of food hubs in their regions.