Creating a Business
In a business, individuals work together to create and produce goods or services for sale. Others also purchase the goods and services for sale. The business owner then is the individual who owns the business. Usually, a business will make a profit from the goods and services it provides. A company may be formed as an corporation, partnership, or a limited liability company.
Many businesses are either publicly held corporations or privately owned by one individual. Corporations are corporations in which one or more members own and control the corporation. Partnerships are associations of people that control and share equally in the profits of the company.
Sometimes a corporation may be established as a separate legal entity from its owners. A sole proprietorship is when the corporation and all of its officers and shareholders are one person. Limited liability partnerships (LLPs) are types of partnerships that only have one partner and are not publicly held corporations. Examples of a c corporation are partnerships that are registered as non-profit corporations.
There are four basic types of business structure. They are sole proprietor, general partnership, limited liability partnership, and corporation. Each has their own set of legal rights and responsibilities. One must decide what type of entity is best for them and how they wish to use their assets.
A sole proprietor has no legal responsibilities or duties. A general partnership has responsibilities to its partners. Forming a limited liability company is best for those who want to own a business but do not have many partners. A corporation is a type of partnership with limited liability. Creating a corporation requires paying taxes and has other responsibilities.
Creating an entity may be done by going through a legal firm, accountant, or business adviser. Creating an entity is a complex process and one should seek expert advice from those who specialize in corporate law. Creating an entity is just the first step in starting a business. The next step is to register the business, hire employees, and create marketing campaigns. Consultants, lawyers, and advisers can help businesses through every step of the way including creation of Memorandums of Understanding (MOUs), capital raising, strategic management, and exit strategy.
There are several types of business entities. Limited liability companies (LLCs) are also commonly known as corporations. Limited liability allows the owners to shield themselves from personal lawsuits. Unlike corporations, individuals cannot transfer their ownership of the business to family members, relatives, or friends. In addition, although limited liability businesses are considered a type of corporation, they are not taxed as one.
Another type of entity created is a partnership. Partnerships are considered a type of entity in which two or more people operate under a common ownership. Partnerships may be classified as general partnerships, limited partnerships, and limited liability partnerships. The majority of businesses in the United States are partnerships. Many small businesses are classified as sole proprietors, because they own only a small part of the business.
Whether you decide to start your own business or incorporate, creating an entity is the first step towards owning your business. Many people choose to incorporate their business, and then form an LLC so that they have limited liability and can avoid being personally liable for debts of the corporation. Other people prefer to form a corporation, and then form an LLC in order to limit their liability for the debts of the corporation. Regardless of which way you choose to start your business, creating an entity is the first step towards creating a successful business.