An average person has an innovative plan to start a business. It begins with an idea but what should they do afterwards. If someone wants to start a business they must ask themselves several questions. What is the size of the business? What level of control do they want to have? What are the business risk and vulnerabilities? What are the initial startup expenses? All of these questions will help them decide which legal form of business they should choose. As a legal form can have significant implications for your personal risk in the business as well as your potential for financial returns (Page 6 of 17 - How to Incorporate | Inc.com. (n.d.). Retrieved from http://www.inc.com/how-to-incorporate/130). The three different types of legal business forms are sole proprietorship, partnership and corporation. All of these have their advantages and disadvantages. Asking those questions and exploring the advantages and disadvantages, a potential business owner will be capable of deciding which legal form they should pursue.
What is the size of the business? Initially it will be a small business with the possibility that it will expand. What level of control do you want to have? Everyone dreams of becoming their own boss and is the reason most people go into business for themselves. What are the business vulnerabilities? Risk and liabilities should be determined and accounted for in the beginning. Risk and liabilities are a significant factor in determining coverage the business owner needs. What are the initial startup expenses? Depending on the nature of the business it could be just a business license. Other types of start-up expenses could include but are not limited to legal fees, material expenses, office space and labor...
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... all three business forms, a small starter business would benefit from a limited partnership because it has a low start-up cost, able to borrow money and limited liability. Sole proprietorship would not allow them to borrow the money needed and has unlimited liability. Corporation has a high start-up cost and complex legal issues. As liabilities increase and a need for more funding arise you can convert your business to another form. So the initial determination that is made can be changed as your business grows.
Works Cited
Ebert, R. J., & Griffin, R. W. (2005). Business essentials. Upper Saddle River, NJ: Pearson Prentice Hall.
Choosing a Form for your Business | Inc.com. (n.d.). Retrieved from http://www.inc.com/guides/start_biz/20676.html
We’ve got the Answers – Northwest Texas Small Buiness…(n.d.). Retrieved from
http:\www.nwtsbdc.org/FAQ_Answers.htm
determine the form of business to start. The form of business we choose to establish new
Ebert Ronald J and Griffin Ricky W. (2011).Business Management.(8th edition). Business essentials, (pp.94-97), Boston [Mass]; London: Pearson.
Easy and inexpensive to form: Sole proprietorship is the simplest and least expensive business structure to organize. Costs are minimal, with legal costs limited to obtaining needed license or permits.
Since it’s the easiest form of business to start why not take full advantage. But there are advantages and disadvantages. In a sole proprietorship there is limited capital which means the owner would have trouble getting the supplies and materials needed for. But it would also seem harder to borrow money and loans from the bank. A loan from the bank seems like the ...
The types of organizational forms are proprietorship, partnerships and corporations. Each has their own advantages and disadvantages. A proprietorship has three main advantages: (1) low cost for start-up, (2) it is subject to few government regulations, and (3) its income is taxed as part of the proprietor’s personal income. Although a proprietorship is a low-cost start-up company, unless the owner already processes the funds, it may be difficult to acquire funds for growth. Additionally, the proprietorshi...
Business owners and managers familiar with the court litigation system understand that high litigation costs and long delays make it difficult and expensive to resolve business disputes in court. They also understand that most civil cases that go to court are settled before trial. They are solved after spending considerable amount of time and money in the complex pre-trial phase, but just in time to avoid the risk of trial. Mediation and commercial arbitration provide superior solutions that help in resolving business disputes. Mediation puts the parties immediately in control of the situation and helps them get desirable outcomes without expending vast resources on litigation procedures (Berg, Permanent Court of Arbitration. International Bureau, International Council for Commercial Arbitration, 2005).
In the world we live in today lawsuits are prevalent and being sued by someone could cause the business to fold. It would be wise for one to obtain all the knowledge before starting a business and it is a reason why people use the term “knowledge is power” (Clarkson & Miller, 2012). As individuals, when we lack knowledge we perform practices unknowingly which could lead to major lawsuits. Ownership of a business can be formed as sole proprietorship, partnership, or corporation. Potential great profit is the reason most people want to start and some do start corporations. One must have knowledge, and understand business law in order to have a positive outcome with operating an organization (Clarkson & Miller, 2012).
There are many types businesses in this world; these include Sole trader, Plc, Ltd, Partnership, Co-op and franchise. These types of businesses are all different from each other. Some of them need just one owner, some have hundreds.
The definition of a sole proprietorship is essentially a business that is run by one person and owned by that person as well. Specifically, a sole proprietorship is separated from the other business entities because of the specific the legal dynamics between the business and the owner of the business. Moreover, because of this factor, sole proprietorships are usually easy to both form, maintain as well as dissolve if need be. In a New York Times article, the authors expressed that small businesses are typically sole proprietorships and as such, this is why it was selected as the business entity (1). Furthermore, the aforementioned reasons allowed for a rather rapid decision on the basis that with this entity, there is an ability of the owner to run it how they see fit.
The purpose of restraint of trade is merely to limitate any future activities of commercial trade, social activity and etc in particular region of a state, or any activities that has substantial impact on local commercial trade or activities. A restraint of trade can be assumed as legal or illegal depends on its effect and attention.
Before a partnership formation is imminent, the business needs to decide on which type of partnership to form. There are three types of partnerships: (1) general partnerships, (2) limited partnerships, and (3) joint ventures. All three partnerships contain two or more owners, but all partners assume equal division of ownership, liabilities, and profits in a general partnership. Limited partnerships offer limited liability protection based on each partner’s contribution percentage. Joint ventures are classified as general partnerships with limited existence periods. Once a type of partnership has been determined, the business fulfills a series of requirements before the partnership can be successfully formed. The first step is to register
Given the various forms of business to choose from it should be easy to find one that meets the needs of your small business. The key is having a plan for your business and its direction in order to determine the best format for new your business. If it is independence you want your business to provide then a sole proprietorship is ideal. If independence is desired but assets are limited perhaps a partnership is a better fit. If it is assistance and stability desired to help get things started then perhaps a franchise is best. Should you have the assets but don’t want the liability then maybe a corporation is a better fit. Whatever your circumstances there is a format to suit your business needs.
Making the decision to open your own business is a major life event. Starting a new venture can be exciting as well as rewarding. The first step to becoming a business owner is choosing the type of business you would like to run. This business can be something that you have wanted to start up yourself or you can go with an established franchise. Are you willing to share the profits in exchange for the relative safety of a franchise or would you prefer the risk and rewards of pursuing your own vision? Franchising is a continuing relationship wherein a franchisor provides a licensed privilege to the franchisee to do business and offer assistance in organizing, training, merchandising, marketing and managing in return for a monetary consideration
For Bob Beech, it is preferential to incorporate his company. A corporation, or incorporated business, gives him the authority and rights to fully protect his assets, transfer ownership at the time of requirement, wholly or in part, the ability to sell stock by going public and making money out of it, tax benefits, save for retirement and have a good credit rating.
Starting your own business can be exciting and it can become a well- rewarded experience. Being your own business includes great benefits, create your