When you want to run a business you must consider what type you want to get into. There are various types including being a sole proprietor, running an general partnership, running a limited partnership, running a corporation, or running a limited liability company.
Each type of business has its advantages and disadvantages. There are also legal liabilities to deal with and tax considerations to think about. When you are dealing with a business entity, you want to make sure you are protected from liability. You never know when someone may decide to sue you for some reason. There are also taxes to worry about. You would want to choose an entity that will give you the best tax advantage and tax break.
When considering the right type of business, it would be good to evaluate each one to determine the best one to get into. Here are the most common ones people usually get into:
Sole Proprietorship: This is the quickest and easiest way to get started in a business. You don't need any prerequisites nor are there much in the way of specific costs to get started. There is some legal paperwork to complete like zone variance or a license or permit. You will even need to apply for a tax number. The one good thing about this type of business is that you re the sole owner. You are in total control.
General Partnership: Starting a general partnership is like starting a sole proprietorship. It is an easy process that doesn't take much to create. You do not have to file any special legal papers or pay any special fees to begin one. A good suggestion would be to have a general partnership agreement made up with the other party just to protect yourself. if you do decide to make one up you would best have a statement detailing the amount of capital each partner will contribute, the rights and duties of the partners, how the profits and losses will be handled, Who will handle withdrawals and salaries, how disputes will be handled, and the method of dissolving a partnership if that should take place.
Corporations: The corporation is considered an entity all by itself. It is separate from the people who created it. All you do is file an application for a charter in the state you live. This application will tell the state the purpose of your corporation, the names and addresses of the incorporators, the amount and types of capital stock the corporation will be authorized to issue, and the right and privileges of the holders of the stock.
Limited Liability Company (LLC): The LLC is new to the business world. It used to be the S corporation that was the big gun for small businesses, but now it is the LLC. If you are looking to start a business with legal liability protection, and a simplified tax on owners, you would best go with an LLC.
There are many types of businesses you can go into. It really depends on the business you want to start and how you will handle it. Plus, saving on taxes and having legal protection against liability helps to.
Martin Lukac represents RateTake Refinance Rates marketplace. RateTake matches consumers with multiple lenders offering low rates. Got too much credit debt? Get Debt Help and you'd be surprised what we can do together.
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Thursday, 4 March 2010
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