Business Structures

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Business Structures

Several different business structures developed some time ago has been the answer to all questions on which path one needs to follow when they get an idea to start a business. The business structures that can be chosen from come with many benefits and setbacks as well as different legal obligations, therefore making it very important to choose the correct one. The three basic business structures are a partnership, corporation, and sole proprietorship, substructures can be limited liability partnership as well as Limited Liability Company. Focusing on the main three, which are more common, they are all equally great in their own ways.

The business structure of partnership begins with two or more people agreeing to contribute something such as money or skills to a business. It can range from a friend contributing their cooking skills and the other friend contributing funds to go into a food truck business. In this structure, each person in the partnership equally shares management duties, profits, losses, debts, and any legal obligations. There is usually a written agreement upon entering this particular business structure.

A corporation is a business structure that is more complex than the others due to the certain limitations beyond just one individual. A corporation has its own legal entity, which is excluded from the owners causing it to have to comply with more regulations and tax requirements. Unlike in a partnership structure where you are responsible for the business debt accumulated equally with your partner, a corporation gives you the benefit of having your personal assets protected from the business debt as well as liability. An attorney is helpful to have when entering this business structure due to its complexity in legal obligations.

The last of the three basic business structures is a sole proprietorship, which has been called the easiest of the three to obtain and is ideal for someone who wants to work alone or in a partnership through marriage. A sole proprietorship is an inexpensive way to get a business name and certificate for a person who wants all authority over their business and business decisions. The taxes for this type of business structure are also easy to handle because all of your profits and losses can be included in your personal income tax return. Similar to the partnership business structure the sole proprietor is responsible for all of the business liabilities, this option still is more flexible legal wise than the other two.