Different Types Of Business Structure Of A Start-Up Company

Sole trader is where a business is run as an individual; so that all profits are their own after tax has been paid on them. Within a sole trader organisation it is possible to employ staff, as the sole trader only means that you own the business personally and do not actually have to work by yourself.

Because there are no shareholders, the partners receive all the profits. This comes as a major advantage. Also an advantage, general partnerships have simplified taxes. This is the biggest disadvantage this type of business has. The business itself does not pay taxes. Any profits or losses recorded by the business are passed through each partner. Taxes are still filed, but taxes are not charged to the business. The partners must also file tax returns that show their individual shares of the company's profits and losses although partners are not treated as employees. Every business type has a legal liability. For general partnerships, this comes as a disadvantage. Since general partnerships are in part owned by

A partnership is an association of two or more people who typically know and trust each other and therefore come together to set up and carry on a business. The partners have an equal control over the company’s affairs and typically contribute an equal capital amount. Incomes and losses are also equally shared . A trust is an obligation given to an appointed person, the trustee, to hold the assets and property of the business on behalf of the

For the partnership, it involves more than one player who is also involved in the business structure. The partners share all costs and profits after entering into an agreement that intends to share any commercial interests. The partners also contribute funds to start and operate the business as the starting capital. This means that there is a pool of experience and resources by the two and the partners share the taxes. The disadvantages of this form of

There are also many disadvantages of Partnerships. In partnerships, sometimes partners disagree and when they disagree it may be a problem for business. For instance, there may be disagreements as one may feel has more control of the business because of his large contribution. That is why there is a need for a deed of partnership before venturing into any business agreements. The other disadvantage is that partnerships have unlimited liability this means each general partner is liable for the debts of the firm no matter who was responsible for causing those debts. Division of profits also means that partners may as well share risks general partners can lose their personal properties and everything else they own if a business goes bankrupt or loses any lawsuit. Partnerships are also difficult to terminate- Once one has committed himself to the partnership, it is not easy to get out of it except through death which leads to automatic termination of the

Choosing the appropriate structure of the business practice is a complex exercise and a whole range of factors need to be analysed. One must not only analyses current circumstances, but also consider the future plans and the effect of the business structure on these future plans. Following is the brief overview of the factors which should be considered before finalising the business structure.

The sole proprietorship is a business which is owned and managed by one individual. Some of its advantages are, the ease of formation, its management control, and its distribution of profits. Some of the disadvantages are, its unlimited liability, the lack of continuity, the capital requirements.

Sole proprietorship is an independent business owned by one individual. Sole proprietorship businesses are relatively small and in most cases the financial resources of one person are adequate to cover operational expenditure.

Disadvantages of Partnership: Owners of partnerships are held responsible for all company debts and legal responsibilities, and are subject to losing personal assets if the company is caught up in costly legal situations or goes bankrupt.

Partnership: Partnership business is when two or more people are involved in the business they put in the money their skills and other resources and share profit this source of finance is more suitable for a company if they want office space and more features for their company. For example a law firm needs a property for them to meet their clients for a law firm property they will need to pay it off by mortgage.

Sole Proprietorship is the least complex form of business that a person can operate a business under. This form of business is not legally set up. Sole Proprietorship means that the owner and the business are the same. In a Sole Proprietorship, the owner can either operate under their own name name or they can also operate under a fake name or d.b.a. filing. The 7 key characteristics of a Sole Proprietorship are:

The sole proprietorship is the simplest form of business organization. A sole proprietorship is a business that is owned by an individual who is solely responsible for all aspects of the business. The owner is personally responsible for all debts of the business, even in excess of the amount invested. The business and its owner are thus considered the same entity.

Sole traders consists of only one person running the business who has unlimited liability and 100 percent of the shares of the company.

However, there are disadvantages of having a partnership structure for a business. The biggest problem of a partnership is the decision making that is involved during a meeting. Most of the times, partners disagrees with each other and will ultimately lead to arguments and personal conflict. Additionally, when a partner makes a mistake and creates a problem for the business, each partner is involved with all the debts and liabilities. This is a disadvantage for you and the partners because you have to pay for a mistake a partner did and it could be at any value.

The decision helps to manage the business more efficiently. You will find that smaller companies may not have specific departments to deal with particular functions, but may have key individuals to deal with specific requirements of those functions. All companies have hierarchies; this means that there will always be a boss or someone to report to