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Legal Forms of Business Essay

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An average person has an innovative plan to start a business. It begins with an idea but what should they do afterwards. If someone wants to start a business they must ask themselves several questions. What is the size of the business? What level of control do they want to have? What are the business risk and vulnerabilities? What are the initial startup expenses? All of these questions will help them decide which legal form of business they should choose. As a legal form can have significant implications for your personal risk in the business as well as your potential for financial returns (Page 6 of 17 - How to Incorporate | Inc.com. (n.d.). Retrieved from http://www.inc.com/how-to-incorporate/130). The three different types of legal business forms are sole proprietorship, partnership and corporation. All of these have their advantages and disadvantages. Asking those questions and exploring the advantages and disadvantages, a potential business owner will be capable of deciding which legal form they should pursue.
What is the size of the business? Initially it will be a small business with the possibility that it will expand. What level of control do you want to have? Everyone dreams of becoming their own boss and is the reason most people go into business for themselves. What are the business vulnerabilities? Risk and liabilities should be determined and accounted for in the beginning. Risk and liabilities are a significant factor in determining coverage the business owner needs. What are the initial startup expenses? Depending on the nature of the business it could be just a business license. Other types of start-up expenses could include but are not limited to legal fees, material expenses, office space and labor...


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... all three business forms, a small starter business would benefit from a limited partnership because it has a low start-up cost, able to borrow money and limited liability. Sole proprietorship would not allow them to borrow the money needed and has unlimited liability. Corporation has a high start-up cost and complex legal issues. As liabilities increase and a need for more funding arise you can convert your business to another form. So the initial determination that is made can be changed as your business grows.


Works Cited

Ebert, R. J., & Griffin, R. W. (2005). Business essentials. Upper Saddle River, NJ: Pearson Prentice Hall.
Choosing a Form for your Business | Inc.com. (n.d.). Retrieved from http://www.inc.com/guides/start_biz/20676.html
We’ve got the Answers – Northwest Texas Small Buiness…(n.d.). Retrieved from
http:\\www.nwtsbdc.org/FAQ_Answers.htm


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