Your business structure impacts the amount of taxes you pay, how much money you raise, your liability and the amount of paperwork you need to do. Before registering your business, you need to select the business structure. Though you can change the business design later, there can be some restrictions. The Jefferson city mo business law attorney can help you decide the appropriate business structure for your business. In this blog, you will learn about sole proprietorship and partnership.
A sole proprietorship is a structure in which you alone will have full control over your business. You alone are liable for any debt or obligations related to business. Though it sounds good in this type of structure, you will find it difficult to raise money as banks are hesitant to lend money, and you can’t sell stocks. The sole proprietorship is a good choice for people testing their business before doing a formal business. The types of the sole proprietorship are self-employment, freelancers, and a franchise.
- Self-employment: An individual may provide his goods or services to a list of clientele. For example, a social media marketer serves several businesses.
- Freelancers: A freelancer does not work for a company on a payroll basis. They generally work on a per-project basis.
- Franchise: In a franchise, you gain the right to use the company’s brand name, but you have to abide by the set structure made by the franchisee, and they also take support in the marketing of their brand.
A partnership is a good choice if two or more people together build the business. The two most common associations are limited partnerships (LP) and limited liability partnerships (LLP). The other types of alliances are joint venture limited liability limited-partnership.
- Limited partnership: In this case, one general partner has unlimited liability in a limited liability partnership, and the other has limited liability.
- Limited liability partnership: In this case, each owner has limited liability, thus protecting each individual of the collaboration from debt caused due to other partners.
- Joint venture: In this type of business, there is a certain time frame of partnership after which the partnership dissolves.
- Limited Partnership: In a limited partnership, the general partner has unlimited liabilities, and others have liability upto the level of their initial investment.
- Limited liability limited partnership: There is more than one general partner and an unlimited number of limited partners in this case.
Choosing a business structure can be often confusing, but it is one of the fundamental decisions for your business. So consulting with an expert is always beneficial.