Types of Proprietorship
Proprietorship owns an unincorporated business. This business structure is owned by an individual who ahs the full liability of all the assets and at the same time has the full rights with all its profits.
It is good to know the types of proprietorship if you are planning to start a business.
Various business structures have its advantages and disadvantages. In the business industry there are three structures available that include sole proprietorship, corporations and partnerships. Choosing the best business structure depends on the individual preference and circumstances.
Sole proprietorship is the most common used in the business industry. This is a business structure in which the business is owned by an individual who has all the rights in making decisions. This means that the owner has the full responsibility over the business including the debts and many others. The drawback about this business model is that the owner is required to pay the debts as his personal debts. Nevertheless, sole proprietorship can enjoy unlimited freedom in the workplace as compared to partnerships.
It is very easy to start sole proprietorship because of the fewer regulations and taxing privileges. The owner can have the opportunity to take all the profits when the business is in good condition. Likewise, the accounting is much simpler because the owner will pay the self employment taxes from the profits made. Indeed, sole proprietorship is the easiest and simplest business structure.
Choosing the Best Business Structure
Proprietorship is not confined in sole proprietorship that is why it is important to be smart in choosing the best business structure. Keep in mind that fees and procedures are some of the important factors in forming a business. Apparently, each business structure requires different legal paperwork. Likewise, some business models are expensive while others are affordable. If you do not understand the various business structures it is recommended to seek advice from business lawyers.
Aside from proprietorship, you can also choose other business structures such as partnership and corporation. However, just like in proprietorship there are also other types of partnerships and corporations. Thus, the benefits would depend on the type of the business structure that you would choose. Nevertheless, whatever option you may choose the important thing to take note is it should be helpful in your business.
Consider all the important things involved in a proprietorship. Obviously, you could not start the business unless you secure all the legal documents needed in a proprietorship. In this sense, the first thing to do is to inquire from your state about the laws and regulations governing this kind of business structure. Make sure to comply with all the requirements to avoid problems along the way. As much as possible you should consult business professionals so that you can avoid mistakes when starting a proprietorship business.