Law 531 Legal Forms of Business
Legal Forms of Business
Choosing a form of business for a product or type of service depends on the liability an individual is willing to assume, how much involvement an individual wants in the day-to-day work, and how much control an individual wants over the business. Prior to making a choice, an individual must understand each form of business as well as the risks and rewards for each. There are numerous forms of business, including sole Proprietorship, Partnership, Limited Liability Partnership, Limited Liability Company, Franchise, Corporation, and S-Corporation.
Sole Proprietorship A sole proprietorship can be any person who owns a business. This form of business is not a legal entity and is one of the simplest to setup. The cost to set up a sole proprietorship is reasonable and the business owner is required only to register the individual’s name and obtain the necessary licenses for the business. The business owner can combine personal and business assets into one account and customers usually pay owner directly or use the name of the business on checks. One negative aspect of a sole proprietorship is the business owner liability for any business debt; including lawsuits from creditors should the business fail (The Basics of Sole Proprietorships, 2005). The sole proprietorship as a preferred form of business is for an individual who has minimal start-up funds. Additionally, the business owner will be able to start-up quickly without excessive legal paperwork. Examples of this type of business are a home daycare or a nail salon.
Partnership
A partnership consists of two or more owners who do not file to become an LLC or a corporation (Nolo, 2013). There are two types of partnerships general and limited partners. A partnership is the least expensive co-owned business and the easiest to set up. Partners in business are both liable for the business regardless of who sets up the deal (Nolo, 2013). The paperwork to set up a partnership is
Choosing a form of business for a product or type of service depends on the liability an individual is willing to assume, how much involvement an individual wants in the day-to-day work, and how much control an individual wants over the business. Prior to making a choice, an individual must understand each form of business as well as the risks and rewards for each. There are numerous forms of business, including sole Proprietorship, Partnership, Limited Liability Partnership, Limited Liability Company, Franchise, Corporation, and S-Corporation.
Sole Proprietorship A sole proprietorship can be any person who owns a business. This form of business is not a legal entity and is one of the simplest to setup. The cost to set up a sole proprietorship is reasonable and the business owner is required only to register the individual’s name and obtain the necessary licenses for the business. The business owner can combine personal and business assets into one account and customers usually pay owner directly or use the name of the business on checks. One negative aspect of a sole proprietorship is the business owner liability for any business debt; including lawsuits from creditors should the business fail (The Basics of Sole Proprietorships, 2005). The sole proprietorship as a preferred form of business is for an individual who has minimal start-up funds. Additionally, the business owner will be able to start-up quickly without excessive legal paperwork. Examples of this type of business are a home daycare or a nail salon.
Partnership
A partnership consists of two or more owners who do not file to become an LLC or a corporation (Nolo, 2013). There are two types of partnerships general and limited partners. A partnership is the least expensive co-owned business and the easiest to set up. Partners in business are both liable for the business regardless of who sets up the deal (Nolo, 2013). The paperwork to set up a partnership is