Newer businesses and companies are popping up all the time. Some of these businesses are started by people who are brand new to the idea of starting their own business. These entrepreneurs probably have a lot of questions about this new adventure they are starting on, and they will need help.
One of the first questions many entrepreneurs have is "what type of business structure should my company follow?" The answer to this question depends on a wide variety of factors, from the product or service you are offering to the size of your company. But, more to the point, what are the types of business structures that a company can choose from?
- A sole proprietorship is a simple way to begin a business, as it only takes the spirit to start a business. One owner, one business, no paperwork to establish the sole proprietorship. You just start your business.
- A partnership is just an extension of the sole proprietorship, with two or more people partnering up to own a company.
- More complex business structures, such as limited partnership and limited liability companies, will cost you but they establish important financial protections for the owners. Corporations go a step further, as these act as their own tax entity, shielding owners and shareholders from liabilities that could ruin them.
- There is also the non-profit option, which means that your business' intent is to fulfill charitable, educational, scientific, literary or religious goals.
Source: FindLaw, "Types of Business Structures," Accessed Oct. 4, 2016