the Business Structures You Must Know
Seven of the types of business structures are main. A structure that helps a certain business to thrive may spell doom to another business hence the reason for different models. Different businesses have diverse rules. The different models of businesses will be clear if you read to the end.
The first one happens to be the sole proprietorship but see page. The ownership of this type is a single person. Although the owner bears all risks and debts, it is very easy to start. Also, there is no possibility of the sole proprietor selling shares.
General partnerships is the next category. There are several partners in this one unlike the sole proprietor although they are similar in other areas. All partners share the profits and losses. Decision making may be hard if there are too many partners. 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. There is space to accept other partners later but the liability is limited. All general partners will share all debts and profits. Also all legal liabilities are thus shared.
The other category is the one referred to as the corporations. those who own shares in the company are the ones who own a corporation. The running of the company will be defined by the shareholders. The number of shares an individual has will dictate the proportion of profits they will receive. When capital is needed, it can be raised by selling shares. Again, corporations will easily get funding from banks. Also, corporations do not have 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 S Corporations is the other category. There is a difference between these and the standard corporations. The bulk of the losses and tax deductions will be felt by all shareholders. The maximum number of shareholders is 100 but read more now. They however offer much protection to the shareholders.
The other category is the Limited Liability Companies but learn more. The business structure in this one is recent. They have aspects of both partnerships and corporations. The profits of the owners are taxed but see this company.
There is a level of protection offered by these ones to the owners. If you run high risk businesses, this is the right type for you.
The last one is a Co-Op. This type is run by members of a cooperative society. They mainly provide services to the members but see website.