Some Business Structures to Think About
There are seven main major business structures. The reason for the existence of several models is that businesses thrive at different models. There is a variation as pertains to rules in a particular business. Read on to know the different models.
The first one happens to be the sole proprietorship but see page. The owner of this one is always a single person or individual. The starting of this type of business is easy but the owner bears all the risks. Still, there is no selling of shares of the firm in the firm by the sole proprietor but consider this company.
General partnerships is the next category. There are several partners and this is the major distinction between this category and a sole proprietor. If there are loses and profits, they are shared by all partners. The number of partners begins at two but having many of them delays decision making. If the business is set on an informal agreement, the partnerships always fall.
There is another category called the Limited Liability Partnership. This type of partnership must be accompanied with some paperwork as well as legal fees when setting up. Other partners are free to join later and the liability is limited. All the partners will share in the debts and profits. It is the same case when it come to legal liabilities.
The other category is the corporations. The owners of this one are the ones who own shares in the company. The shareholders will decide the running of the company. The profits are shared according to the number of shares each individual has. Raising capital is easy since it only requires selling of shares. Also, banks will willingly give loans to corporations. Also, there is no personal liability in regard to corporations. Due to the complex structure, it is very hard to make decisions in corporations. Also, there are more taxes and legal fees meted on corporations.
Again, there are the S Corporations. There is a difference between these and the standard corporations. The bulk of the losses and tax deductions will be felt by all shareholders. Again, the shareholders cannot be more than 100. They however offer much protection to the shareholders.
The other category is the Limited Liability Companies but learn more. They have a recent structure. They have aspects of both partnerships and corporations. The owners will be required to pay taxes on their profits.
However, the owners have a level of protection. This is the best category for those who run high risk businesses.
The last one is a Co-Op. The ones who run this one are members of a cooperative society. The members benefit since they are provided with services.