lessons.cgi - Start Your Own Small Business: Lesson 5...

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Start Your Own Small Business: Lesson 5 (printer-friendly version) Your Instructor: Kris Solie-Johnson INSTRUCTIONS: To print this page, wait for the page to fully load. Once the document is ready to print, simply click your browser's File menu and choose Print . To save this page, click your browser's File menu and choose Save As . Select a disk drive and folder to receive the file, and change the name of the file to less05.htm . To view the file while you are offline, just go to the drive and folder you selected when you saved the file and double-click the file named less05.htm . Your browser will start and you will have access to the file. Chapter 1 Introduction Today, we'll explore the different legal structures you can choose for your business. After this lesson, you'll feel more confident about talking to a lawyer. You'll know the right questions to ask. And you'll feel secure about raising objections when your lawyer's explanations confuse you. That's important, because the day will come when you need a lawyer's help. You'll need it for things like setting up your business structure, protecting your ideas, preparing contracts, and defending your business against legal actions. As an independent businessperson, you should not find our legal and fiscal systems mysterious. By understanding them, you can make them work for you. Note: Nothing in this lesson is meant as legal advice. Whenever you have questions about the laws governing your business's structure, consult a competent attorney. Okay, let's get started learning more about the legal aspects of your business. The decisions you make in the beginning can affect your business down the road, so let's make sure you understand your choices. Chapter 2 Sole Proprietorships and Partnerships When you make a choice about the legal structure of your business, you accomplish two main goals. The first is that you protect your personal assets. The second is that you enhance your personal wealth. You do that by choosing tax-efficient methods of withdrawing capital from your business.
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If you don't make a choice about the structure of your business, then, by default, your business becomes a sole proprietorship or partnership. These structures have some advantages. But they aren't the best way to go for protecting your assets. Let's look at the most basic questions to ask yourself before you start deciding on a structure: To what extent are you personally willing and able to be responsible for business debts and losses? How much profit do you expect to make? The more profitable your business is, the more tax issues you'll have when you withdraw the profits. Will you employ family members? Are you in a profession where liability can't be shielded? How likely is someone to make a claim against your business?
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This note was uploaded on 10/12/2009 for the course BUS Start Busi taught by Professor Solie-johnson during the Spring '09 term at Santa Monica.

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lessons.cgi - Start Your Own Small Business: Lesson 5...

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