A Short Overview of
The Most Reliable Business
Structures Of 2020
A business structure outlines how various business operations are or will be carried out. It’s among the ways businesses can prospect future growth and expansion. One thing to note, however, is you need a business structure that is specifically designed for your type of business. What is included in a business structure will entail activities, responsibilities, and rules. Key factors to consider when selecting a business structure are costs, liabilities, and flexibility. Below is a short overview of the most reliable business structures of 2020.
Limited Liability Companies (LLC)
Limited liability companies are a type of business with a flexible structure. An LLC allows shareholders, owners, and partners to enjoy the benefits of ownership without being directly affected by the business liabilities such as debts or taxes. Members will also be exempt in case the business is found to carry out unethical and illegal activities. If you are looking to start a business, and specifically one that involves members or shareholders, you might want to consider a business structure such as an LLC as it is more flexible. With an LLC type of structure, members (owners) have the freedom to choose how much percentage of ownership they want depending on how much they have invested in the business.
Sole Proprietorship
This is a common type of business structure. If you are planning to start a business and are not comfortable in having someone else dictate, plan, or oversee your operations, then a sole proprietorship can suit you best. It is the simplest business layout where one person is responsible for liabilities and profits. Sole proprietorships are easy to implement with less paperwork, and also, the legal requirements are not as demanding compared to other structures of business. Additionally, you have the option of dissolving your business whenever you feel like it, as there are no formal documents required. The caveat with such a business structure is that your assets will be at risk in case your business runs into debts.
Partnership
Two or more people can come together and form a partnership. Partnerships can be categorized into limited partnerships or general partnerships. For a limited partnership, one member controls all the business operations while the other contributes and shares part of the profits. General partnerships require all members to participate and profits to be shared equally.
For partnership structures, it’s of utmost importance to enlist a business attorney to help you with the legal issues that pertain to such structures. A business attorney will help you draft the agreements as well as in registering your business. There are also compliance issues to factor in including certifications, tax compliance, and the daily running of the business.
Co-Operatives
Co-operatives are member-owned business structures with individual members having the same rights in making business decisions and in sharing losses and profits. This is a type of structure that is more involving, with members being the key decision-makers in all the various aspects of running the business. It’s for this reason that makes cooperatives more competitive than other forms of business structures.
The complexities involved when establishing a business structure must be factored in before making the final decision. There are legal, managerial, and equity aspects to consider when choosing the best business structure. The above are reliable business structures you can consider if you are looking to establish your own business.
