A business structure relates to how the business is organized with regards to who makes the decisions and instructs which part of the business. Often drawn as a diagram, it shows the relationship between decision maker(s) and different departments within the business.
Tax liabilities should be one of the main concerns, when one starts a business. The way in which a business is structured, can impact its tax liabilities; and if one is mindful of the most beneficial business structures available, they stand to dramatically minimize the amount of taxes they have to pay. A business structure can also provide legal protection, such that, all legal charges can only be directed towards the business, and not toward its owner(s).
Some of the common types of business structures available are…
Cooperative: This structure involves a committee that is headed by elected representatives. Members of this structure are not liable for any debts, except when the negligence of said members is the sole reason a debt has been incurred (aside from this, legal charges are confined to the business entity); to find out how to dispute debts, when you think it was wrongfully incurred, consult a credit expert at removedebtfast.org/methods/quick-fix . Decisions made within this structure are handled in a democratic manner, as well as, work assignments, use of resources and executing action plans geared towards boosting competitiveness.
Corporation: The structure of a corporation is multifaceted. Though it is more expensive to set up, the control of the corporation stays with the people who hold shares in the stock. If a particular stockholder (or a group of stockholders) own a minimum of 51% of the stock, they are eligible to make policies and decisions. The size of the corporation is dependent on how it operates – formally or informally. Smaller corporations are likely to function less formally, however still need to maintain proper documentation. Officers – hired by the board of directors – are responsible for daily management tasks, and can legally bind the corporation to contracts they sign on its behalf.
Sole Proprietorship: Thought to be the least expensive, Sole Proprietorship is the most comfortable and easiest way to start your business. It is owned by an individual who maintains all of the legal rights and responsibilities of the business. He holds control over all profits flowing into the organization, and solely responsible for all debts, if any. Under a sole proprietorship, the owner is personally liable, thus, in the event that a debt has been erroneously incurred, by someone other than the sole proprietor, www.RemoveDebtFast.org/help can demonstrate how to erase erroneous debt from credit reports (to keep the business’s credit score intact).
Partnership: A partnership is created when two or more people agree to pool their economic, administrative and technical resources, with the intention of operating a profitable business. There are basically two types of partnerships: limited partnership and general partnership. Limited Partnership is one that has both limited and general partners. The general partners run the business and are answerable for the debts in the partnership. Limited partners loses a limited amount, in a loss, compared to the amount others invested in the deal. Whereas, a general partnership is thought to be the one which is devoid of limited partners and each partner in the deal holds administrative authority (and responsibility) for the debts taken for the partnership. For more information on debt management, www.RemoveDebtFast.org/help/the-easy-way can site several more examples.
The main advantage of the business structure is the ability to make decisions quickly – without lengthy meetings and discussions, or proposals that sit waiting approval. Decisions can be made pretty much instantly and changes can quickly be put into place. This allows businesses to quickly adapt to any change in market conditions. It is also a leadership style which is used by governments in emergencies, employed by virtually all countries that have laws in place that allows legislation to bypass parliament (or equivalent bodies), and vesting it with centralized power (when speed & response-time becomes top priority).
Another advantage is that it is one of the least expensive business structures available, and (in most cases) will be the cheapest option. This is because there are no layers of middle managers to pay or maintain.
Lastly, everybody knows who is in charge and who they are accountable to – removing the chances for confusion among different department heads asking for different things (from workers).
Given the overly litigious climate, one would be well-advise to consider a business structure, of some kind. There are countless reports about people who are looking for a quick paycheck, by filing false claims against business (fraudulent slip & fall accident suits, for example). The designs of a new business owner can come to a grinding halt, when they are personally liable and have to divert all their financial resources to pay some trumped up damages. So, to avoid this fate, any legal protection is better than no protection, at all.