Introduction:
Sole Proprietorship, Partnership, Franchise, Corporation, Limited Liability Company, are all examples of business formats available today. We will review each type of business and their function or purpose. We will take a look at the positives and drawbacks of each, and evaluate them to gain a better understanding of each.
Sole Proprietorship:
Sole Proprietorships make up the majority of small businesses in America today. They are easily started and typically do not require a large initial investment. Sole Proprietorships are businesses like the little mom and pop sandwich shop around the corner. They are started out by a single owner and are not separated financially from their owners. They may have separate banking information from the owner but taxation requires that the business and owner are one. The single most distinguishing feature of Sole Proprietorships is the unshared, unlimited liability and responsibility of the owner.
There are several advantages to a Sole Proprietorship. First is the simplicity of it. Typically there are very few restriction s and they require minimal licensing. They offer independence, and the ability to ‘be your own Boss.’ Of course there is the fact that as the owner all the profits belong to you. Taxes are combined so there is no separate filing and there are tax advantages to filing as a business rather than an individual. That brings us to the disadvantages of Sole Proprietorships.
Some disadvantages to being a sole proprietor is often resources are limited. Because there aren’t any real differentiating factors between the business and its owner often credit is based on the owner of the business. Verifying income is difficult for banks to discern so obtainin...
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...are easily transferred from one business form to another. If the plans are for rapid growth and possible transition of business forms an LLC is Ideal.
Conclusion:
Given the various forms of business to choose from it should be easy to find one that meets the needs of your small business. The key is having a plan for your business and its direction in order to determine the best format for new your business. If it is independence you want your business to provide then a sole proprietorship is ideal. If independence is desired but assets are limited perhaps a partnership is a better fit. If it is assistance and stability desired to help get things started then perhaps a franchise is best. Should you have the assets but don’t want the liability then maybe a corporation is a better fit. Whatever your circumstances there is a format to suit your business needs.
LLCs must typically pay more fees to file as LLCs compared to some other business entities or sole proprietorships. Additionally, many states require yearly renewal fees. However, these fees are usually less than what some other corporations have to pay. Because of the protections afforded to LLCs, some types of businesses are ineligible to file as LLCs. Banks, insurance companies, and medical service companies are examples of businesses that can not be a LLC. Another big disadvantage is taxes. Although LLC’s allow owners to avoid federal taxes, you may actually end up paying more than it would with a different corporation, depending upon the nature of the business. Working with an accountant and/or tax lawyer is a really good idea when planning your business and forming your LLC but can also be quite expensive. The LLC business form is a relatively new concept. As a result, not a lot of cases have been decided surrounding LLCs. Case law is important because of predictability. If you know a court has ruled a certain way, you can act in a specific way to protect yourself. But if not many laws have been established yet, there is a certain vulnerability with your corporations that could expose you to greater
determine the form of business to start. The form of business we choose to establish new
There are many different types of business structures, but if you own and operate a business that it is a sole
A Sole Trader is a business that is owned by only 1 person. They are
There are over 28 million small locally owned businesses in the United States and 70 % of these businesses are owned and operated by a single person. Owning a small business is not an easy task it takes hard work and dedication, Steve Jobs once said “you need a lot of passion for what you’re doing because it’s so hard”, people don’t realize
Sole tradership is when the business is fully owned and managed by one person, though others can be employed to help run the business. As the sole traders only financial income is from the business and/or bank loan, they do not have the resources to expand and cover regional or national areas. These types of businesses are located in the small business sector and usually cover local areas. Such businesses could be hairdressers, corner shops or market stalls etc. Sole traderships have unlimited liability so if the business fails to pay its debts the financial responsibility falls on the owner/s to pay the debts in full even if they have to sell their business, personal possessions and assets.
The opportunity to help others is the first that comes to mind. The advantage that small businesses have over a big named company include: better personal service, and the ability to respond quickly to opportunities. Starting and managing your own business allows you to be independent. You are your own boss, and you are the one who gets to make all of the decisions. When you own a business
Small Business Administration or better know as SBA. This is what businesses will use when they have come up with a great idea that they want to open up there own place and get it off the ground. The small business administration is a great place to go even when you just want to get help within your business also. Throughout looking through this administrations website you will also find out the steps When dealing with this administration you have a wide variety of things that you can go through them for such as Starting and Managing, Loans and Grants, and Contracting.
Access to capital and credit at various stages in the business life cycle is identified as the major hurdle by the entrepreneurs. For many small firms and most start-ups, the personal funds of the business owners and entrepreneur and those of relatives and acquaintances constitute as the major source of capital. For many small businesses, especially during the early years of their operation, credit is simply not available. For many others, the limited available credit is not through bank loans. Due to this many of them rely on multiple credit card balances and home equity loans as major sources of credit for start-up firm. Because banks are bound by laws and regulations to prudent lending standards that require them a risk management assessment for each loan made. These regulations were made more vigor during the late 1980'' and early 1990 . Banks always found that lending to manufacturing firm with hard asset such as property, equipment, and inventory has always been easier than lending to today's expanding service sector firms. Because the service sector firms own few hard asses, therefor lending judgment have to be based in terms of character, markets, and cashflow, which make it difficult to the bank to meet the regulations for the approval of the loan. Additional, the banking industry, as well as the entire financial sector of the
Making the decision to open your own business is a major life event. Starting a new venture can be exciting as well as rewarding. The first step to becoming a business owner is choosing the type of business you would like to run. This business can be something that you have wanted to start up yourself or you can go with an established franchise. Are you willing to share the profits in exchange for the relative safety of a franchise or would you prefer the risk and rewards of pursuing your own vision? Franchising is a continuing relationship wherein a franchisor provides a licensed privilege to the franchisee to do business and offer assistance in organizing, training, merchandising, marketing and managing in return for a monetary consideration
An additional advantage is that a sole proprietorship can be easily organized. It’s easy to start your own business. First of all, it costs very little money to start your own business. As a sole proprietor, you have minimal legal requirements. The owner doesn’t have to establish a separate legal entity.
Small businesses have been considered the mainstay in countries around the world. In many European countries for example, the small business has been considered crucial to the success and flourishment of the country in general. Most individuals start upon a small business venture in the hopes of realizing ownership, independent profits and personal success. Small businesses can prove extremely successful when planned properly. Studies suggest that several small businesses, however, close or fail within the first few years of operation. This failure suggests that a majority of small business owners may not have as yet realized the crucial success factors necessary for successful implementation of a small business.
Starting a small business is often one of the hardest things a person can do. Some people start a business out of pure fascination, or even as a hobby. Whether starting a business for personal reasons or simply the grandeur to make loads of money, everybody needs to have a plan. Starting a small business is no easy task and can take days if not months to prepare. The most important aspect to have is the tempura and heart to start a small business, as without passion, no business can succeed. One has to be his or her own boss, make dream, reality and be willing to market and sell a product. It takes a lot of discipline, long hours and hard work, something many do not have. However with the right willingness, passion and dedication a business can be the start of something big.
The literature of small businesses would not be complete without stories. Starting and operating a small business is more a culture where stories are handed down, passing on wisdom from generation to generation. And these stories can serve as a guideposts as well as being an inspiration.
There are some factors to consider before you put up and run a small business: First and foremost is the