The first step for any entrepreneur is setting up a company that will be used to formally start on the business journey, but several new business owners struggle to know the best way to go forward. These are the most common ways to organize a business, from the simplest through the most complex.
Sole Proprietorship
A sole proprietorship is the most elementary form of business ownership, where there is one sole owner who is liable for the company. It is not a legal entity that separates the owner from the business, meaning that the owner is liable for all of the debts and responsibilities of the company on a particular level. In trade for that liability, the owner keeps all the profits earned from the company.
Partnership
Partnerships are business ownership where two or more people work as co-owners. There are two kinds of partnerships, which are General Partnerships and Limited partnerships, separated primarily by the liability coverage by the partners. In a general partnership, all partners of the company have unlimited liability in the company. For a limited partnership, at least one of the partners has limited liability, expecting they are not individually liable for the debts of the company.
Limited Liability Company
A form of company ownership that is taxed like a partnership but uses the advantages of limited liability like a corporation is a “limited liability company”. In comparison to a corporation, it is easier to prepare and does not get double taxation. While together getting more credibility than a partnership or sole proprietor when it comes to finding resources such as working funds. This form of ownership is normally reserved for a group of experts such as accountants, doctors and lawyers.
There are more business ownership types such as s corporation, franchise, co-operative and corporations.
