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How does a startup compare to other types of businesses?

On Behalf of | Sep 6, 2022 | Business Formation And Planning |

A business in the preliminary stages of formation or growth, when it brings a new product or service to the market, is considered a startup. In 2021, Texas saw 492,233 such entities, 106,674 more than the previous year.

Involvement level

The difference between a startup and entrepreneurship is the level of involvement. Startup founders are heavily involved in their business operations and more motivated by innovation than profit. Entrepreneurs search for profitable tried-and-tested business ideas rather than focusing on developing innovative solutions. Startups tend to bring something newer to the market that may not yet exist. Entrepreneurs often set up their business structure where they’re leading the ship without needing to be heavily involved in operations.

Business structure

Business formation law doesn’t have a startup category, so startups need to choose from the existing types of businesses, including sole proprietorships, partnerships, LLCs and corporations. Your business formation depends on the amount of capital available, workers and liability concerns. It’s a good idea to set up an LLC, partnership or corporation if there’s a possibility of being sued. These business structures protect your personal assets, unlike a sole proprietorship.

Common types of startups

Startups can be scalable, social entrepreneurship, small business or large company types. A scalable startup strives for fast, massive growth by securing venture capital and going public. Making a social impact is the primary objective of a social entrepreneurship startup and is usually non-profit. A prominent company startup comes from an established brand expanding in a new direction.

The primary mission behind your business idea influences what type of business it is. For example, your company is a startup when you have an innovative product or service.