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How Does Small Business Structure Work
• Sole Proprietorship: As the simplest form of business, sole proprietorship allows a single individual to operate his or her own business. He or she can choose to use another name for the business if he or she does not want to use a surname. This type of business does not need a very rigidly formal organizational structure. What is important is to file a business certificate. If there is more than one branch of the business located in several locations, then it is also required to file a separate business certificate for each branch. • General Partnership: Similar to sole proprietorship, this type of business also needs a business certificate. The only difference is that this is handled by two individuals who agree to invest their money for a small business. The agreement may be in verbal or written form which all depends on the owners. • Corporation: Unlike the two types of businesses, sole proprietorship and general partnership, corporation requires one person to assume legal responsibility in terms of liability. The responsibilities include perpetual duration, centralization of management, and then ease of transferability. In a corporation, their directors and shareholders work hand in hand to propel the business. Shareholders are essentially the owners while the directors are just the managers of the business. Shareholders have the right to manage the business without the help of the directors, should the need arise. Corporations fall into two categories: “S” and “C” corporations. In a corporation, it is always recommended that you consult a lawyer especially in filing business certificates. You might need to file them at the office of the Secretary of State. • Limited Liability Company: This type of business is unique since it has the characteristics of a partnership and a corporation molded into one. For instance, in a limited liability corporation, the owners may decide to choose what structure they see fit like having a general partnership but with a very limited liability. Or there is also an option to have a limited partnership but the members take equal part in the management of the business. Another option is to have an “S” corporation but without any tax restrictions and without ownership as stipulated in the laws set by the Internal Revenue Service. Under an LLC business structure, the members can choose to have a direct hand in the management or they can also appoint other members to manage the operation. Limited Liability Company: • Limited Partnership: In this type of business, one member acts as a limited partner while the other as a general partner. The agreement can either be verbal or written which does not need to be filed as long as there is a certificate of business organization. • Limited Liability Partnership: There is an option as to how you should register a limited or general partnership. You can always choose to have a limited liability partnership since it will benefit all the general partners in terms of liability. When you decide to start a new business, you should always consult an attorney who is very knowledgeable in this type of industry. Article Directory: http://www.articledashboard.com The law firm of de la Riva & Associates, PLLC, provides legal services for people and businesses who face difficult situations. Whether you need an attorney because of a car accident, personal injury, business dispute, or any other reason, we are here to help. We are dedicated to protecting all of your legal rights, and seeing your case to a successful conclusion. |
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