How Businesses Are Structured

Whether you have small business or large organization, legal structure defines how you manage the upper hierarchy of your organization. Every structure has its tax and liability responsible for decision making and future. Most common structures for small businesses are usually individual ownership whereas as the size of the business increases partners handle them in organized way. Each structure has its pros and cons, you should choose the best structure as per business requirements.

  • Sole Proprietorship: Standing as individual beacon in the running the whole business for complete sovereignty. Normally this is the most common form of business ownership. Profits coming from conducting the business are taxed to owner individually as single entity. Similarly debts can cause unlimited liability to owner as well.
  • General Partnership: When two or more persons come up together for Business operations and management. A simple agreement is agreed between partners to avoid potential conflicts. Profits and liability are divided on the basis of their percentage they have in owning a company.
  • Limited Partnership: In this type of business structure there are limitations to one or more partner in the partnership whereas a general partner has more control over the company to make decisions to conduct business their own way. Limited partners may receive a separate part of their investment.
  • LLCs and LLPs: Limited liability company (LLP) or Limited Liability Company (LLC) is mixed form of business using Corporate and partnership structure. This act as separate legal entity from its owner with has the power to acquire new assets, incur liabilities and conduct day-today business as usual.
By | 2016-12-13T23:05:59+00:00 May 19th, 2016|Categories: Buyer Articles|Comments Off on How Businesses Are Structured

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