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Know the Business Structures
Seven of the types of business structures are main. Different models are necessitated by the fact that businesses will not thrive by use of the same model. Rules and regulations relating to specific businesses vary. Read on to know the different models.
Sole proprietorship is the first one. The ownership of this type is a single person. The starting of this type of business is easy but the owner bears all the risks. Also, there is no possibility of the sole proprietor selling shares.
The next category is the general partnerships. There are several partners and this is the major distinction between this category and a sole proprietor. If there are loses and profits, they are shared by all partners. Too many partners will make decision making too hard. Many of the partnerships always fall since they are based on informal agreements but see website.
The other type is a Limited Liability Partnership but check it out. To set up this type of partnership, there is some paperwork and legal fees that are required but check this service. Other partners are free to join later and the liability is limited. All debts and profits in this one are shared by all general partners. It is the same case when it come to legal liabilities.
The other category is the corporations. The owners of this one are the ones who own shares in the company. The shareholders will decide the running of the company. The number of shares an individual has will dictate the proportion of profits they will receive. When capital is needed, it can be raised by selling shares. Again, corporations will easily get funding from banks. Also, there is no personal liability in regard to corporations. Due to the complex structure, it is very hard to make decisions in corporations. Also, there are more taxes and legal fees meted on corporations.
The other type is the S Corporations. These are not the same as we know standard corporations. The bulk of the losses and tax deductions will be felt by all shareholders. The maximum number of shareholders is 100 but read more now. However, there is a very high degree of protection that the shareholders will enjoy.
There are also the Limited Liability Companies. They have a recent structure. They have aspects of both partnerships and corporations. The owners will be required to pay taxes on their profits.
However, the LLC has protection for the owners and its important to know what are the benefits of an LLC . This is the best category for those who run high risk businesses.
The last one is a Co-Op. The ones who run this one are members of a cooperative society. The members benefit since they are provided with services.