Different Business Types

There are different types of business that you will have to choose from when you are considering business ownership.

Sole Proprietorship

A sole proprietorship is a business that has only one owner. There can be many benefits and pitfalls to running your business as a sole proprietor.

The Benefits

·    You can keep more of your business monies earned.

·    There are fewer hassles than there might be with other proprietors.

·    You can run the business in any manner that you please.

·    It is the least costly way of starting a business.

·    It is easier to get your business started and apply for your permits, licenses, etc.

·    Dealing with the issue of taxes is less complicated and cheaper.

Pitfalls

·    It is more costly when the business is faced with losses.

·    All responsibility falls solely upon the owner’s shoulders.

·    All of the costs that go along with maintaining the business, such as keeping it running smoothly, are solely the owner’s.

·    All decisions are made at the owner’s discretion.

·    Basically, everything is the owner’s responsibility.

There are many reasons why you should consider running a business on your own; however, you do have other options.

Partnership

There are many types of partnerships that you can delve into. The most commonly chosen are general partnerships and limited partnerships. General partnerships can be entered into with a mere oral agreement or you can have lawyers draw up legal and binding partnership documents.

If you are considering the idea of having a partnership you should know that signing a legal partnership agreement is the best way to go about it. The legal fees for these documents are more costly than a sole proprietorship.

When you decide to enter into a partnership, you should be certain to add only the specifics of the agreement that you can both agree to.

Here is a list of some of the other things that you should have in place in a partnership agreement.

You need to know the following:

·    The type of business that you plan to run.

·    The correct amount of equity that both parties will invest.

·    How you will divide your profits and losses.

·    How much you are each compensated.

·    How you will divide your profits and losses.

·    How long will you plan to be in business together?

·    Set up provisions for any changes made and closing down.

·    Dispute settlement clause.

·    Restriction of authority and expenditures.

·    A reasonable settlement in case one partner dies or is incapacitated.

As you can see, there are many things to consider when starting a partnership. As with running a sole proprietorship, there are a lot of benefits and pitfalls as well.

Benefits

·    The cost of investing in the business is cheaper since they are divided among two people instead of one.

·    The money needed to process legal fees and everything else that requires money is cheaper.

·    There is assistance in dealing with the everyday tasks like, merchandising, employee issues, general dealings with the public and all general business concerns.

·    With two people running the business, each can have more time with their families and friends.

·    A partnership generally makes the profits and revenue much higher.

·    Losses are shared by both and are thus actually easier to deal with.

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