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A company is any entity that is engaged in business and can be a company, association or corporation. One of the first and most important steps in starting a business is deciding how it will be structured. To make an informed decision, you need to know how business structures work, as well as the advantages and disadvantages of each. It is advisable to seek the advice of a lawyer when making a decision.
A sole proprietorship is a company composed of only one person and is not considered a formal organization. Legally, this type of business does not exist separately from its owner. The sole proprietor pays taxes on the income of the company under his own name and is solely responsible for the financial operations of the company, including the payment of business debts. If the company is sued, the owner’s personal resources will be at risk. If, as a sole proprietor, you plan to conduct business under your own name, it will not be necessary to present an assumed business name. If you choose another name for your company, you will have to request a certificate of assumed company name issued by the state, also known as DBA (assumed name).
A general association is similar in structure to a sole proprietorship except that this structure involves two or more people. Each partner pays their own taxes separately, using their own social security number or tax identification, but the company does not exist as a separate entity. Therefore, the financial resources of the partners could be at risk in case of a lawsuit. Unless the people in the collaboration plan use their own last name instead of an assumed business reason, the partners will have to submit a DBA application.
A corporation is a commercial entity that exists legally separate from its owner (s). The owners of a corporation are the shareholders, their percentage of participation in the company is represented by their corporate actions or shares. Shareholders can choose a board of directors to manage business operations, or they can create an agreement, which will allow them to manage the company directly. Corporations are more complex than companies not incorporated in society. You will have to present the corporation’s taxes separate from your personal taxes. In most states, you will not be held personally liable for corporate debts.
Limited Liability Company
A limited liability company is neither an association nor a corporation, but it has some characteristics of both. The owners are able to participate in business decisions, as in a company, but an SRL offers some protection of the individual assets of their owners. Its flexibility has become a popular choice among business owners. To form a limited liability company, you will have to present a training certificate to the office of the Secretary of State. The form will ask you to choose whether your company will be managed by its members or by a person in charge. Most states allow you to complete this form online through the website of the State Secretariat.
A limited partnership consists of two or more people, including at least one general partner and one limited partner. The details of this structure may vary from state to state. The business affairs of a limited partnership are carried out in accordance with a collaboration agreement created by the partners. The agreement does not have to be presented in public, but the company has to present a training certificate. If you wish to limit the liability of collective partners, you have the option of registering as a limited association. The Secretary of State can provide you with these forms.