The Different Business Structures for Your Company
Venturing into the business realm is more than just a brilliant idea. You need to be someone who can endure all the challenges you might face in the process of building your own business. Bravery, willpower and a healthy dose of resilience are example of the qualities that a person starting a business should have. There is a long list of the things that should be put into mind but one of the most important thing is that your method of trading.
You are required to take into consideration a lot of things in deciding on the suitable structure for your business. One small wrong decision can make all things go wrong in the blink of an eye. So, it is significantly important that you consider the advantages of operating as a sole proprietor, an LLC or an LLP or even as a corporation in the long run. If you have decided to handle the business all by yourself then you can start as a sole trader.
Being is a sole trader is known as the simplest way of doing business. What you must do is to keep financial records and file accounts and get to spend the profits as you wish. Nevertheless, if you need the help of other people, take for example an employee, then you might want to take into consideration another different legal status for your business.
The second type of business structure is an LLP or generally referred yo as a limited liability partnership. People who usually choose the LLP are lawyers, accountants and other professionals. In LLP, each partner gets a slice of profits and has a share in the business. Partners are also protected from liability as long as they do not become a managing partner.
An LLC will get to enjoy a lot of flexibility. The business is guarded from business debt and other obligations. An LLC is not the same as a corporation but a legal company that gives limited liability to its owners. To know more about what a limited liability company is, you can ask an LLC registered agent to help you.
And obviously, just like almost everything in this world, these different business structures have its own pros and cons. Sole proprietorship is only for those who want to manage a business alone. You get spend the profits you make in any way you want. On the other hand, you are personally accountable for all the business’ financial debt.
A limited partnership, despite the fact that it offers a lot of flexibility and is quick to set up, can still make arguments arise. Only one person is accountable for the obligations but one incorrect move of a partner is the responsibility of all partners.
A limited liability company does not have the same credibility as a corporation has and it comes with a lot of tasks.
As you can see, each business entity has its own pros and cons so it is better to not decide immediately.