Kinds of Business and Forms of Business Organization

Organizing a successful business venture requires a good deal of understanding of the market, constitutional taxes and above all the process of legal liabilities. Formation of a business organization also requires setting of reliable procedures, which are instrumental and relevant for various means.  A business entity, once it is formed, will most likely take any of these forms:

Sole Proprietorship

This is one of the basic options available to the business owner, and one of the biggest advantages is that the owner will not have to go through legalities or fill forms in comparison to other business organizations.  The entire structure of business is organized in such a fashion that profits accrued from business will come directly into your hands. Moreover, there is no need for you to differentiate the business structure and you become responsible for everything.

When you act as a sole proprietor you can use your business name much different from your own name.  In this type of business activity, liabilities, losses, profits and assets become responsibility of the business owner. Such types of partnerships are considered as high-risk businesses. You should also authenticate the kind of legal structure, if you are going into the problems with your personal debts, or just in case you are going for huge debts for starting your business, or maybe you are involved in the business activity where you can be charged legally. The high-risk businesses include those where intellectual property rights are involved, or businesses where animal care, childcare or manufacturing of edible goods is required. Besides, there are several other types of activities, which are considered to be highly at risk. The ease of running sole proprietorship firm is that you are the decision maker at all the times. Moreover, a comprehensive insurance policy will bring peace of mind. 

Limited Liability Company (LLC)

The acronym LLC stands for limited liability company. This business structure will provide protection to personal assets of the owners from all types of personal liabilities. The individual running LLC business activities becomes responsible if he or she does anything that is considered fraud, or illegal or maybe even try to bring the personal affair into LLC activities without showcasing potent reasons. An LLC company is considered to be the structure of the state, and there are no special federal taxations. Should you want to go for this type of business organization, proper paper work should be filed. It is also essential to give unique naming identity to your LLC for filing basic documents. You also need to issue a public notice in the local newspaper, which shows that you have formed the LLC. The organization structure of LLC shows that it is a hybrid form of business, which has characteristics of a corporation and a partnership.

Partnership Firm

The partnership firm is run by two or more individuals, and each of these individuals will contribute their knowledge and all other forms of resources in growth and development of the entity. As the name is suggestive, partners in the partnership firms will divide their profits. All the partners in firm will have unlimited liabilities. In case of the limited partnership deeds, creditors do not have to run over the personal assets of the partners.

Corporation

This kind of business organization will enjoy a unique legal essence, which stands separated from that of the business owners. If you want to show your ownership in a corporation, obviously, there is the need for you to purchase the shares of stocks. Here the owners are referred to as the stock holders, and they enjoy limited amount of liability.  However, they are going to have restricted participation in the operations of the company. In a corporation, there are always the board of directors as well as elected stockholders who will make the final decision and control activities of business.

Cooperative

This is the business entity, which is specifically owned by individuals working in a group and all business activities are run for mutual benefit. Cooperative firms can function as either the unincorporated or the incorporated.

Depending on the type of business activity you like to run, you need to make the final decision. Make sure, you go through every detail of your business. The better you are organized in your business, the better it is for success of your business.

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