Depending on the location and climate of your area, the best form for your solar energy business can vary. There are pros and cons to nearly every option when it comes to setting up shop so it’s essential to consider the local environment before making a choice.
Here, we’ve put together a short guide around the different types of solar energy businesses and how to determine which option is best suited to you.
What is a Solar Energy Business?
A solar energy business, also known as a solar company or simply a solar firm, is a business that provides commercial solar energy services, such as designing and implementing solar power systems for businesses and homes. In some cases, a solar firm may also sell and install solar panels on-site; however, this is not always the case as there are regulatory restrictions on what you can and can’t do as a solar installer. In most situations, a solar firm is a separate legal entity from the person or company who owns it.
Even if you plan on sticking with one location, you’ll still need to determine how best to structure your business so that it can operate efficiently. Different states and localities have different requirements when it comes to forming a company and registering a trademark so it’s important to do your research before making any decisions. A simple way to find the ‘right’ answer for your situation is to look at the form your state requires to operate a solar company (if you’re unsure, contact the Small Business and Entrepreneurship Development Center for assistance).
The Benefits of In-House Operations
If your state doesn’t require you to register your trademark as a solar company in order to do business, then you have the option of keeping your operations in-house. As the owner and operator, you have full control over what goes into the business and can ensure that all legal requirements are met. You’ll also have the advantage of receiving more detailed customer information as you in-house your operations.
There are, however, some disadvantages to operating your business in-house. For one, it can be more difficult to expand your business if you’re limited by your location. Another disadvantage is that you have to be the one to market and retain your customers. Since you’re already familiar with the products and services your company provides, it’s easier for you to do so. Thirdly, if you’re looking for investors, it may be difficult to secure funding as you’ll have limited access to financial markets. Finally, as an in-house operator, you’re essentially self-sufficient and there is no backup in case of emergencies.
The Advantages of Going Freelance
If your state requires you to register your trademark as a solar company in order to do business, then you’ll need to look into contracting with outside service providers to help you with the operation of your business. Since you don’t have the option of in-house operations, you’ll need to consider the advantages and disadvantages of working with a freelancer. The main advantage of going freelance is that you no longer have to be limited by your location when securing new customers. You can also outsource some of the work to countries with lower labor costs, which in turn can help you save money. Furthermore, a freelancer can help provide insurance coverage and put in place retirement plans for you and your employees.
The disadvantages of going freelance are similar to those of operating your business in-house. You’ll have to be the one to market and retain your customers. Going freelance can also be more difficult if you want to secure investors or venture capitalists as you’ll have limited access to financial markets. Finally, since you’re no longer self-sufficient, in case of emergencies you’ll have to look to other sources for help.
The Advantage of An Incorporated Company
If your state requires you to incorporate your business, you’ll have the option of forming an incorporated company. In case you’re wondering, an incorporated company is a legal entity that goes by the company name you choose when registering it in your state. Most states will not allow you to register a trademark as an incorporated company, so you’ll need to find another option if that’s important to you. You can also use your registered name as the company name so long as you don’t use any other types of brands or logos in your business.
The advantage of incorporating your business is that you can have access to more financial resources due to the fact that you have the backing of a larger company. In case you decide to venture into more debt, you can do so with the confidence that you’ll have the resources to pay back your loans. An incorporated company also provides legal protection in case you’re sued by a customer or vendor. The main disadvantage of forming an incorporated company is that since you have the backing of a larger company, you’ll be more prone to attracting higher interest rates when lending money to your business.
What is a C Corporation?
A C corporation is a legal entity that can take on a variety of forms, such as a limited liability company (LLC) or a corporation. In case you’re wondering, an LLC is a separate legal entity from your personal assets. Unlike a corporation, an LLC has no shareholders and is owned by the people who form it. A C corporation can be considered a more formal type of business and are usually used by larger companies for their tax purposes.
The advantage of a C corporation is that due to their legal structure, you won’t have to worry about paying any personal income taxes as your business will be considered a legal entity. In some cases, you can even deduct business expenses from your taxes as a business is deemed to be a ‘pass-through’ entity for tax purposes. You’ll also need to look into the legal requirements of your state when deciding whether or not to incorporate. Some states will not allow you to operate a business without incorporating, so be sure to check with your state’s corporate authority before making any decision.
Which Type Of Business Is Best For Setting Up Shop In Your State?
Depending on the location and climate of your area, the best form for your solar energy business can vary. There are pros and cons to nearly every option when it comes to setting up shop so it’s essential to consider the local environment before making a choice.
In this article, we’ll cover the different types of solar energy businesses and how to determine which option is best suited to you.
Sole Proprietorship
If you don’t want to incorporate your business, then one of the simplest ways to set up shop is through a sole proprietorship. A sole proprietorship is a form of partnership where you’re the only person who owns the business. As the owner and operator of your state, you have complete control over what goes on within the company. There aren’t any legal restrictions when it comes to the activities of a sole proprietorship. Your state’s corporate authority can also be your primary source of information regarding legal requirements and mores when it comes to doing business.
One of the main disadvantages of a sole proprietorship is that you’re completely responsible for everything that happens from a legal standpoint. In case you’re sued by a customer or vendor, you’re the person who will have to pay out of pocket. The good thing about this type of business is that it requires very little to no legal paperwork to operate. Registration in your state is usually done through the mail so it’s quite easy to get registered without having to visit the office. All you need is a business license and an agent registration to operate a sole proprietorship in your state. This type of business allows you to test the market and see how customers react to your services before committing to a larger operation.
Partnership
A partnership is another option for those who want to operate a business without having to worry about corporate formalities. A partnership is a form of partnership where individuals who are involved in the business own shares in the company and are therefore considered equal partners. Like a sole proprietorship, a partnership doesn’t require you to register your trademark in your state and can be formed with little to no legal paperwork. In fact, many states will not even require you to provide a license or an agent registration to form a partnership. The only difference is that a partnership includes other persons who are not connected to the business in any way. For example, you might include your spouse or an unrelated business partner in your partnership to create additional income streams or to provide expertise that you don’t have.