The type of business or organisation that you set up, will fall under a form of ownership for taxable reasons, legal liability etc.. It’s an important decision to make, by being well informed could limit any further problems that could arise in the future.
A Service Business
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The 4 Different Forms Of Business Ownership / Organisations
A Sole Proprietor is only for a single person with a small business, The personal assets however are at risk by creditors under unlimited liability terms should the the Sole Proprietor have business debts, but if the business is successful with the business license and the reasonable costs to apply, it an easy and flexible option.
Partnership / Limited Corporation
A General Partnership is a business owned by more than one person, a Formal partnership Agreement doesn’t need to be made, as a verbal can be accepted, but between all parties the profits are divided equally amongst each partner who all contribute and invest their money and resources, any business debt affects them all equally, under unlimited liability terms.
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A Limited Partnership is a business owned by more than one person, a Certificate of Partnership has to be filed and a Formal Partnership Agreement has to be made, between all parties the profits are divided equally amongst each partner who all contribute and invest their money and resources, any debts affects them all under unlimited liability terms, but creditors can’t ever gain the personal assets of a limited partnership, and their own liability amounts to how much investment made, their position and ownership.
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A corporation is very expensive to set up and is usually done for legal reasons, a business organization that has a separate legal personality from its owners, taxed twice as the stockholders lead the Corporation, they have limited liability, but the profits of the Corporation are taxed as personal income, the dividends from shareholders are also taxed as owners, under the term personal income also, creditors cannot receive personal assets either.
Limited Liability Company LLC
Is a combination of a Partnership and a Corporation, all parties make the decision to either be taxed as a Partnership, Corporation or Sole Proprietor, and receive limited liability but are not taxed twice or incorporated term, their profits and income are shared by the owners similarly like Partnership.
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