A sole proprietorship is a business owned by a single individual. This is the simplest form of business ownership, since the same worker is the sole owner. The business may have a different name than the owner, and may use a separate employer identification number for tax purposes, but the business does not actually have a legal personality of its own. Consequently, the major disadvantage of a sole proprietorship is that the owner is legally responsible for all debts or damages caused by the business. There is no legal requirement to incorporate a sole proprietorship.
– The ease of creation of this company time, since there are no legal obstacles to incorporate it.
– The cost of creating this type of company is economic compared to the rest.
– The individual owner responds with all his patrimony in case of bankruptcy.
General partnership, is a business structure in which two or more people share the business, as well as the responsibility of managing the company and the income or loss generated by the business. That income is paid to the partners, who then claim it on their personal tax returns. It is essentially just an agreement between two or more people to operate a business. The main difference between a partnership and a sole proprietorship is that a partnership may own property in the name of the partnership and in some states, may offer minimal protection from creditors.
In general, the partners are legally responsible for debts incurred or damages caused by the business. In addition, a partner may be held liable for the acts of the other partners.
– Division of responsibilities within the organization and possibility of sharing the business.
– Facilitates the formation of the company.
– Each partner must respond with their assets in case of debt or damage.
Limited Liability Company
A limited liability company, or LLC is a hybrid between a corporation and a partnership. An LLC is registered as a partnership, but the individuals involved are not liable with their personal assets for debts or damages.
This business model combines some advantages of corporate structure with elements of partnership taxation, partially protecting your individual from potential financial problems and lawsuits against your legal entity.
– No liability with personal assets in case of debts or damages.
– More expensive to incorporate and management procedures.
A corporation is a totally separate entity from its owners. A corporation provides owners with protection from debts and lawsuits, since in most cases they cannot be held personally liable. A corporation, however, has to pay corporate income taxes, which can be significantly higher than individual taxes. A corporation is the most complicated entity to form and the most expensive.
- the partners are not liable with their assets for the debts of the business and it exists in perpetuity. There is also no limit on the number of shareholders. It also has certain tax reliefs.
- Corporation is a totally separate entity from the partners and therefore has double taxation. This means that the corporation itself pays taxes, and that each partner’s earnings must be reported separately and taxed on them.
It is a commercial relationship between two parties, by which one of them pays a certain amount of money to have the license to start a business using a brand already consolidated in the market.
It is a contract between two independent parties: the franchisor and the franchisee. On the one hand, the franchisor (or franchisee company) assigns the right – license to use its trademark, during a certain time and place.
On the other hand, the franchisee has to pay an amount of money to the franchisor. This amount of money paid to acquire the rights is known as: entry fee.
Advantages for the franchisee
– Minimizes the risks involved in starting a new and unfamiliar business
– Start working with a consolidated company whose brand is well known in the market
Disadvantages for the franchisee
– It does not have ownership of the brand, so it does not have total control
– You have to pay to create your business
Currently, it is a very common form of contract that strengthens the competition for small and medium enterprises with respect to large companies.
With the franchise, companies are growing and expanding without the need to make a large investment. On the other hand, the franchisor has to maintain some permanent control over the franchise.
A non-profit organization is set up so that all of its profits are reinvested in its programs, according to the Society of Nonprofit Organizations. A nonprofit organization can be a professional society, a charity, a political group, a fraternity, or a government agency. Before you decide to start a nonprofit organization, there are certain things that could affect your decision.
A board runs a nonprofit organization, according to the Society of Nonprofits. This board chooses who will manage the company, what salaries will be received, who the board members will be, and how the company’s money will be distributed. Although there is an administrative manager, it is not one individual who makes the final decisions about the direction of the company and how profits are allocated.