It is very easy for you to find yourself confused especially in the world of business and finance. So many things are going to be very challenging especially when you’re starting out. According to statistics today, very many businesses are started every year. When you look at the statistics specifically, you’ll notice that you have more than a million businesses as startups. If you are among the many people that are starting their businesses this year, you want to ensure that you’re very careful about the business structure you’re going to choose. You’ll realize that your business is going to be influenced a lot by this especially in the future or as you continue growing.
Knowing the differences between the different types of business structures will be a very good place to start. The advantages and disadvantages will also be quite important for you to understand. It will be possible for you to choose the best position for your company and you have this kind of understanding. While this may seem to be a complicated decision, you can simplify it. You have some options that you can choose from when it comes to business structures. Among the main business structures will be the partnership . Basically, this usually involves multiple people partnering to start a business and distribute the profits between themselves.
However, in this kind of business, you’ll also share their liabilities. When it comes to the percentages of sharing of profits and liabilities, it is always very much dependent on the agreements but most of the time, it is equal among the partners. When it comes to the filing of taxes, every partner is supposed to follow up on their profits and losses and do the necessary filing with the IRS. This business structure can be very good for you especially when you have a group of like-minded individuals. You will also have the option of choosing the full proprietorship business structure. In a sole proprietorship business, you will have a business being operated by the owner. The business and the owners of the business are the same entity and therefore, there is no separation of liabilities.
According to a lot of research that has been done, more than 73% of the businesses in the USA use this kind of business structure. This kind of business structure however has limited because although it is very simple to run, it also means that expanding can be difficult because of limited financial resources. The other option you have available will be the limited liability company, you want to consider the advantages of an LLC. The LLC usually features separation of liability.