The Different Business Structures and How to Choose the Best One for Your Company
In the world of business and finance, there are a lot of things that can be very confusing. So many things are going to be very challenging especially when you’re starting out. There are very many businesses that are usually added every year. Specifically, you have more than a million businesses started out every year. If you are among the many people that are starting their businesses this year, you want to ensure that you’re very careful about the business structure you’re going to choose. The future of the business is influenced a lot by this.
The best thing would be to understand the different types business structure and knowing their differences. The advantages and disadvantages will also be quite important for you to understand. When you have this kind of understanding, it is easier to make the important decision for your business. It may seem to be a very easy position but you can actually simplify it. You have some options that you can choose from when it comes to business structures. Among the main business structures will be the partnership . Basically, this usually involves multiple people partnering to start a business and distribute the profits between themselves.
These partners however are also going to share their liabilities. Depending on how the partners are going to agree on the sharing of profits and liabilities, you have a very simple structure, you will quickly realize that most of the time it is done equally. The partners in the business are each going to be responsible for their own filing of taxes and therefore, they always need to keep track of their profits and losses. If you are in a group of like-minded individuals that have the same vision of the type of business they want to start and run, the partnership option is always going to be very good. You will also have the option of choosing the full proprietorship business structure. In a sole proprietorship business, you will have a business being operated by the owner. The business and the owners of the business are the same entity and therefore, there is no separation of liabilities.
According to a lot of research that has been done, more than 73% of the businesses in the USA use this kind of business structure. This kind of business structure however has limited because although it is very simple to run, it also means that expanding can be difficult because of limited financial resources. So many advantages of an LLC are there today and that is why the LLC option or, limited liability company is the other great option you can use today. This is going to have separation of liability between the owners of the business and the business.