Description of the aspects to consider when choosing a business structure.
It's tough. :
Establishment, business structure, llc, s corporation, c corporation
Article body:
Copyright 2006 Konstantin Goudkov
With the shop set up and ready to call yourself an entrepreneur, the next thing you have to decide is what you are trying to use
What tax you pay for your business structure, how many people register it on the tax What kind of people in the tax choose your daily business structure for business with you This is your business Choosing the right product to sell is just as important as it will play a major role in management aspects.
So what is your choice? There are different types of structures, but these are classified as corporate and non-corporate.
The structure of a company is typically various kinds of companies including business corporations, and is also known as C-corporation. In addition, S-corporation and Close Corporation are among the corporate structures.
Due to the non-corporate structure, we have the following: only ownership, different kinds of partnerships (general partnerships, limited liability partnerships,
Each has its advantages and disadvantages associated with these.
As a guide chooser, you can think of these factors in your own mind:
A) Liability protection-getting into business is always risky. No matter how much time, effort and money you put, there is no real guarantee for success. There is a structure that provides the highest liability protection for business owners, and some do not. For example, if your business gets a lawsuit, who will pay? You or your business? The answer is about business structure. In most cases, if your business is a high risk venture, choose a structure that offers maximum liability protection like LLC's or companies
b) Taxes-Taxes are one of the main concerns of businessmen. The most frequently asked questions are: Certain types of structures, such as sole proprietors and partnerships, allow business owners to be taxed only once-personal income levels Meanwhile, LLC is taxed according to its number of members You
The value of knowing the principles of taxation for each structure is especially important if your business will soon be beneficial in its early years.
c) Control and Management--Who will manage your business? How much equity business? How will you be willing to give up control to others? Do you want to move your business by yourself?
Your business structure often decides how much control you have and other stakeholder have in the business. If you want maximum control that you and everyone else have the say, the sole proprietor is a way to move. However, if there are other stakeholders, there is a structure that allows you to define the amount of control that the co-owner has. For example, Limited-Partnership gives your active partner maximum control over the day-to-day operations of your business. However, if you and your partner claim the same right, the limited liability company will ensure that all members are given equal business rights.
If control is an issue, look at the management aspect of each structure and choose the one that is most acceptable for you.
d) Continuation and transfer-how long are you in the business? If you do not have a clear answer, or if you have an answer, consider "as long as it is informative" continuation or business life. There is a structure that can give unlimited life for the business-even if the owner dies or the stakeholder sells the share, the business will continue Some structures do not allow this and the owner's It resolves much more easily in certain situations such as death, departing partners, divorces, and acquisitions. Another issue that you should also consider is the transferability or ease of sale of your share or interest in the business if you want to sign the transferred shares to the owner of the enterprise structure with other shareholders or members To do. Llc and partnerships, on the other hand, struggle to transfer shares and profits without the company being dissolved, unless there is an acquisition agreement.
e) Capitalization-how much capital do you have to set up a business? Clearly, private companies can be set up in partnerships like simpler structures and at minimal cost. On the other hand, corporate structure has many documents that require real cash, both in the initial setup and maintenance. If you need additional capital later, consider a structure that can do this with minimal effort. For example, companies can easily raise funds by offering shares to the public, but individual business owners can raise funds from individual loans and bank loans.
Bottom line-no one so tell me that business structure is perfect for you. Choosing the right entity requires many careful reflections of your part. Apart from the above factors, you should also consider your resources and your management functions at hand. Being aware of your specific strength and need, being informed of the different aspects of each business structure is important to identify the right business structure for you
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