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Some Business Structures to Think About
Seven of the types of business structures are main. 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. 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. The starting of this type of business is easy but the owner bears all the risks. Also, there is no possibility of the sole proprietor selling shares.
The next category is the general partnerships. 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. Decision making may be hard if there are too many partners. If the business is set on an informal agreement, the partnerships always fall.
The Limited Liability Partnership is the other category but learn more. To set up this type of partnership, there is some paperwork and legal fees that are required but check this service. Other partners are free to join later and the liability is limited. All debts and profits in this one are shared by all general partners. It is the same case when it come to legal liabilities.
The other category is the corporations. those who own shares in the company are the ones who own a corporation. The shareholders will decide the running of the company. The number of shares an individual has will dictate the proportion of profits they will receive. Shares can be sold if the company wants to raise capital. Also, banks salivate when it comes to lending to corporations. Also, corporations do not have personal liability. Due to the complex structure, it is very hard to make decisions in corporations. Still, corporations will pay more in legal fees as well as in taxes.
The S Corporations is the other category. They are not the same as the standard Corporations. The shareholders will bear all the losses and tax deductions. The maximum number of shareholders is 100 but read more now. However, the shareholders are highly protected but view here.
There are also the Limited Liability Companies. The business structure in this one is recent. There is a merging of the aspects of partnerships and corporations. The owners will be required to pay taxes on their profits.
However, the LLC has protection for the owners and its important to know what are the benefits of an LLC . If you run high risk businesses, this is the right type for you.
The last one is a Co-Op. members of a cooperative society are the ones legible to run this type but check it out. They mainly provide services to the members but see website.