Running a business can be rewarding both in terms of finances and your personal goals. However, it is no easy task. There are various moving parts to consider to ensure that your company remains profitable at all times.
One of the more important decisions you will have to make is what kind of structure your company will take on. There are various forms of business structures, with each having its own strength and weaknesses. Outlined below is a brief summary of some of the more common types of business structures that you may wish to consider.
Going it alone
A sole proprietorship means that you take on all of the responsibility. You absorb any profits personally, but at the same time, you are personally responsible for any debts, outstanding balances and other obligations. Smaller businesses find sole proprietorships beneficial because they can get off the ground quickly this way. You can start trading immediately, from your own personal banking accounts. However, it is important to bear in mind that you may need specific licenses or permits depending on the commodity that you are trading in.
Establishing a partnership
If you feel like you need some help with the day-to-day operations of your company, you may opt to enlist a business partner. This means that you do not take on the full burden of financial obligations, and you also have to share the profits. Before choosing this option, you want to make sure that you rely on a business partner who is trustworthy, financially savvy and shares your vision for the company.
Limited Liability Company (LLC)
An LLC is a structure where the company is owned by “members.” The key distinction between an LLC and a partnership is the separation between the business entity and the personal individuals involved in running the company. Debts and other financial obligations fall upon the company rather than the individual having to account for them.
These are just some of the more common business structures, there are plenty more to choose from. The selection and complexity of business law is a key reason why it is best for you to explore your legal options before making your next move.