Selecting the right business structure is perhaps the most challenging decision every new entrepreneur has to make. This decision entails a number of consequences that can lead your business toward or away from success. Hence, you must explore all possibilities in choosing the appropriate structure that will fit your goals, resources and personality as an entrepreneur.
Here are the common structures that business owners can adopt:
Association – This structure can be used for non-profit businesses that provide charitable or recreational services.
Corporation – This is a business owned by at least five members or incorporators. Each of the incorporators has equal voting rights.
Company – This is a business owned by shareholders and supervised by directors. A company can hold assets in its own name.
Partnership – In a partnership, two or more people come together to contribute something to the business. Consequently, each of them will share in the earnings and losses of the business.
Sole Trader – This is owned and managed by just one person. The legal personality of the business comes from the entrepreneur himself.
Trust – A business can be operated as a trust for the benefit of others. In this case, the trustee becomes legally responsible for its operations.
Each structure comes with a unique set of obligations. Thus, it is important that you understand your responsibilities as an entrepreneur in your chosen business structure. You can change the structure of your business as it grows through time, but the taxation and record keeping involved in running your business can get complicated. Seek professional assistance in dealing with these legal requirements. Violations can be very expensive to deal with in the long run.
If you need more information about business structures, check out the Infographic published by Alliance Accounting below.
Here are the common structures that business owners can adopt:
Association – This structure can be used for non-profit businesses that provide charitable or recreational services.
Corporation – This is a business owned by at least five members or incorporators. Each of the incorporators has equal voting rights.
Company – This is a business owned by shareholders and supervised by directors. A company can hold assets in its own name.
Partnership – In a partnership, two or more people come together to contribute something to the business. Consequently, each of them will share in the earnings and losses of the business.
Sole Trader – This is owned and managed by just one person. The legal personality of the business comes from the entrepreneur himself.
Trust – A business can be operated as a trust for the benefit of others. In this case, the trustee becomes legally responsible for its operations.
Each structure comes with a unique set of obligations. Thus, it is important that you understand your responsibilities as an entrepreneur in your chosen business structure. You can change the structure of your business as it grows through time, but the taxation and record keeping involved in running your business can get complicated. Seek professional assistance in dealing with these legal requirements. Violations can be very expensive to deal with in the long run.
If you need more information about business structures, check out the Infographic published by Alliance Accounting below.