A business structure is the type of company a business operates as, and which affects how profits and losses are distributed.
The following types of businesses structures exist sole proprietorship, partnership, corporation, limited liability company, and joint venture.
A sole proprietor has control over all aspects of the business with no explicit legal distinction between his or her personal assets and those of the company. The key difference between a sole proprietorship and other types of businesses structures is that nothing separates your personal assets from your accounts receivable (money coming in), accounts payable (money going out), or inventory (goods) held by your company.”
A partnership in business involves each person investing an equal amount of money to either buy or start a company.
Partnerships are relationships between two or more people who are invested in buying or starting a business together. When there is more than one partner involved, the partners must agree on all major decisions made about their business, no matter if it’s big or small. For large decisions, you may want to write down your decision-making process so that any mistakes can be found later even if one partner has left the partnership for some reason. It is also important that both parties should have ownership over how they divide profits and take care of employees’ needs. This way, each person will feel like they’re contributing equally.
Corporations are simply groups of individuals who collaborate for mutual benefit and ongoing operations. One can think of them as one giant team, formed from many smaller teams (or departments). A corporation is a legal entity formed by or under state law. It’ll be registered with the appropriate government office and will issue shares (equity) that grant you certain rights – like voting at shareholder meetings. There’ll also be rules on when you can sell your shares, any restrictions on what it can do, etc.
Limited liability company
A limited liability company does not refer to a limit on the amount of debt. It refers to a limit on liability from the courts. In other words, a limited liability company is a type of legal structure that separates your personal assets from your business assets so you don’t have to worry about going bankrupt if something goes wrong with your business.
A single person can form a limited liability company by filing Articles to HMRC and satisfying any requirements for doing so. The limited liability company provides limited disclosure of its records requiring more confidentiality than traditional corporations or partnerships without actually being private, as all records are still searchable by anyone.
Joint ventures – Joint ventures are partnerships of individuals or companies with the intention of pooling their capital so they can invest in projects, with each party sharing in the resulting profits and losses.
A limited joint venture company aims to stimulate regional economic competitiveness, with a focus on boosting regionally-owned firms up the value chain. The collaboration will use small but significant projects that have growth potential that is internationally recognised as being highly competitive. It’s an unrelated group of businesses working together for mutual advantage. Interests are shared among its members who also share risks and rewards, which is quite different from most forms of partnerships or regular corporations in business today. It is set up by agreement between all members to exist for a specific time.
Have you ever wondered what the main six features and responsibilities of different business structures are? If so, we’ve got you covered. In this blog
post, we explored the three key types of business structures-sole proprietorship, partnership and corporations well as how each one differs from the others in terms of their setup costs, income tax implications and liability protections. We also talk about LLCs (limited liability companies), which can be a great way to protect your personal assets while still enjoying some limited legal protection for your company.
While there is no right answer when it comes to determining which structure best suits your needs or goals, knowing all these options will give you more power over deciding on the perfect fit for you!