the Business Structures You Must Know
There are seven main major business structures. Different models are necessitated by the fact that businesses will not thrive by use of the same model. Rules and regulations relating to specific businesses vary. The different models of businesses will be clear if you read to the end.
Sole proprietorship is the first one. The ownership of this type is a single person. Although the owner bears all risks and debts, it is very easy to start. A sole a sole proprietor cannot sell shares.
The next category is the general partnerships. The main difference between this category and a sole proprietor is that this one has several partners. All partners share the profits and losses. Too many partners will make decision making too hard. Many of the partnerships always fall since they are based on informal agreements but see website.
The other type is a Limited Liability Partnership but check it out. You will need paperwork and also legal fees while starting this type of partnership. This type has limited liability and other partners can join later. All the partners will share in the debts and profits. It is the same case when it come to legal liabilities.
Corporations are the other types of business. A corporations is owned by those who own shares in a company. The shareholders will decide the running of the company. The profits are shared according to the number of shares each individual has. Shares can be sold if the company wants to raise capital. Again, corporations will easily get funding from banks. Another good thing with corporations is that there is no personal liability. However, decision making in corporations is very slow as a result of the complex structure. Also, there are more taxes and legal fees meted on corporations.
The other type is the S Corporations. They are not the same as the standard Corporations. All loses and tax deductions are passed to the shareholders. There is also a cap of the number of shareholders. However, the shareholders are highly protected but view here.
The Limited Liability Companies are the other types of business. The business structure in this one is recent. They have aspects of both partnerships and corporations. The owners pay income taxes on their profits.
However, the owners have a level of protection. If you run high risk businesses, this is the right type for you.
The other one is a Co-Op. The ones who run this one are members of a cooperative society. They mainly provide services to the members but see website.
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