Business Formation-Ownership Structures

Business Formation-Ownership Structures - Types of...

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1 Types of Ownership Structures The most common ways to organize a business: Sole Proprietorship Partnership Limited partnership Limited Liability Company (LLC) Corporation (for-profit) Nonprofit Corporation (not-for-profit) Cooperative. Sole Proprietorships and Partnerships For many new businesses, the best initial ownership structure is either a sole proprietorship or -- if more than one owner is involved -- a partnership. Sole Proprietorships A sole proprietorship is a one-person business that is not registered with the state like a limited liability company (LLC) or corporation. You don't have to do anything special or file any papers to set up a sole proprietorship -- you create one just by going into business for yourself. Legally, a sole proprietorship is inseparable from its owner -- the business and the owner are one and the same. This means the owner of the business reports business income and losses on his or her personal tax return and is personally liable for any business-related obligations, such as debts or court judgments. Partnerships Similarly, a partnership is simply a business owned by two or more people that haven’t filed papers to become a corporation or a limited liability company (LLC). You don't have to file any paperwork to form a partnership -- the arrangement begins as soon as you
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Business Formation-Ownership Structures - Types of...

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