Type of Business Structure
Entrepreneurs often overlook to choose the right business structure for the business. This is one of the most important aspects that you need to address before you launch the business.
You can begin with the ‘Sole Proprietorship’ wherein the owner can be a married couple or an individual.
This is the simplest of all the business structures but when it comes to liability, the owner will shoulder all debts.
‘General Partnership’ can consist of two or more individuals who consent in contributing skill, labor, and money into the business. This is different from ‘Limited Partnership’ since this can consist of general partners and one or more of limited partners. Other business structures related to partnership are the LLP (Limited Liability Partnership) and the LLLP (Limited Liability Limited Partnership).
If you prefer a more complicated business structure, you can opt for ‘Corporation’. This will usually come with financial and tax benefits although there is decrease personal control and higher licensing fees. Another option is ‘Non-profit Corporation’ wherein the company is not focused in generating profits. LLC or Limited Liability Corporation can be formed by one or more persons and/or entities. A special agreement is written by the founders that cover important aspects like profits, losses, interests, etc.
The trust is viewed as a legal relationship between two parties – trustee and beneficiary. Joint ventures are also possible as a business structure but this is usually formed for a certain time period to cover the business operation or transaction. You can also opt for Municipality which is a public corporation. On the other hand, an association is group organized individuals who share the same purpose, activity, and interest. When separate businesses occupy the same space, the business structure is called ‘tenants in common’.
These are the different business structures that you can choose from before startup.
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