The proprietor of the business should be aware of its different forms that exist. It is very important for the owner to choose the desired structure as if influences the amount of paperwork and documentation that needs to be done, capital requirement, personal liabilities and the lifespan of the business. Every configuration has its own pros and cons. The owner can opt for one of the structures based on his interests and anticipation. To know about the various business forms, continue reading this article.
Sole proprietorship: This is the simplest and the oldest business structure. A sole proprietorship is plain and the set up is not difficult to achieve. The sole trader has a full control over the administration and possesses the entire gain. Tax proceedings are also simple.
Partnership: Partnership is established when one or more people share the ownership. A proper legal agreement is signed among the partners that lay down how decisions should be made, how profits are shared, and how to sort out disputation. The tax filing is simple as that of a sole proprietorship. The major advantage in having partners is that the business gets huge funding from each one of the partners. While closing up the business or in case of potential loss, everything can be divided among the partners as per the agreement.
Corporations: Unlike the above-mentioned forms, the corporation itself is a separate entity and can be taxed, sued. Every partner in the corporation is considered a stakeholder and the board of directors is appointed by them. They set forth the policies and makes a decision. The ownership is subjected to change. Extensive funding can happen by selling the corporation’s shares in the market.
Limited Liability Company (LLC): This is new to the business. It comprises the features of both the corporations and partnerships. They have flexibility in tax filing and ease to operate just like partnerships and offer limited liability features of the corporations. We can say it is a hybrid structure.
The trader is independent to choose among any one of these structures. But before deciding on it is important to discuss with the tax consultants. In case of difficulty in arranging for finance, one can take loans or opt for additional income through online trading bots like Bitcoin Trader. Right planning and implementation and the ability to overcome hurdles determine the success of the business.