Sole Proprientorship, Partnership, LLC, Corperation
This is when you are the only one in charge, no partners and nothing to differentiate you from your business. It is the easiest to start up, you only need a license, and a permit with the local government. It's also decently cheap. Unfortunately since your business is connected to you, if your business is to suffer financially there's a possibility you could too. Making it not as much of a professional choice, it might be easy to start up but maintaining could be difficult. There are a couple rules for a sole proprietorship, such as no employees, the owner files taxes under their own name, not the businesses, also if the sole proprietor is to die the company ends, so its good to always plan for the worst. Even if it is left to a family member or friend its considered a new company. An example of a Sole Proprietorship would be small local businesses.
- Is said to be the easiest and most inexpensive forms of business.
- A sole Proprietorship is terminated as soon as the owner dies.
There are two types of partnerships, a General Partnership and a Limited partnership. Both are owned and operated by multiple people.
In a general partnership the partners manage the business, its also very simple and informal. Some down sides to this would be that the partners must take responsibility for another's debt and/or other obligations. But all partners are involved. In a Limited Partnership the partners are really only investors they cant touch the company but have just as much liability as the owners. some policies are the partnership agreement, what this does is lays out how you and your partners take responsibility and how debts are handled. Some examples of Partnerships are Intel, Walmart, and Target.
- There are many different types of partners with different jobs.
- Partners many contribute Money, Property, and skill.
LLP-Limited Liability Partnership
An LLP is kind of like a more formal General Partnership, you have a written partnership agreement, this does come with requirement for annual reports, but its a little more serious than just a hand shake. All partners can manage the business, and have shared liability. Its a very professional choice, a lot of lawyers/attorneys use it to protect themselves from the liability from that of the company. it is a very flexible choice too. Just remember with all this protection insurance costs are fairly high.
- The Government can hold a partner responsible for reporting and paying taxes personal accountable for unpaid taxes or other penalties.
- When a partner takes out a loan they make a personal guarantee of returning it.
This is very separate from it s owners, but has the ability to loan money, hire employees, own assets, and pay taxes, they can sue but also are at risk for being sued. Your not personally liable, the business doesn't die when the owner does. But they and up having to double taxes, and document every last piece of information, its also extremely expensive. They need anti-fraud policies, sometimes confidentiality policies depending on the corporation. Examples of corporations would be Apple, and Nike.
- Global wealth is due to the large number of corporations worldwide.
- Small businesses are struggling due to the dominance of corporations.