In most legal dictionaries, the word “Business” means a corporation, partnership, limited liability company, partnership or corporation. A business is basically defined as an entity or organized organization engaged in commercial, financial, or occupational activity. Companies can either be for-profit or non-profit entities that perform a social purpose or further a socially just cause. The most common forms of businesses are retail companies, partnerships, proprietary enterprises, franchises, non-profitable public services, and cooperatives.
One of the first things you need to do when starting a new business is to get your paperwork in order. This includes creating a written business plan with a mission statement, a by-laws, and financing plans. In order to determine whether your new business will be tax-deductible, it is a good idea to consult a certified public accountant to assist you in completing all the necessary paperwork.
There are two main types of businesses: sole proprietorship and partnership. Sole proprietor means that you are the only named owner and sole proprietorship is a type of limited liability company (LLC). Here are some of the more common types of businesses:
One of the most popular forms of business ownership is partnership. It consists of two or more people who own shares in the same business. Partnerships can be formed through a merger or acquisition of another firm or entity. Some examples of partnerships are limited liability partnerships (LLPs), public limited liability companies (PLCs) and corporations.
Another type of business is proprietorship. A partnership can turn into a corporation but, in addition, there are advantages and disadvantages with this process. The main advantage of a partnership is that there are no capital gains tax liabilities since the partnership was set up as a business. Some other advantages include freedom from double taxation.
Lastly, there is also the business license. This is for the sole purpose of doing business legally and meeting all the requirements that the country’s authorities require. When setting up a business, it is important to note that you will have to pay for a business license even if the partnership is dissolved. Some of the examples of licenses include limited liability partnerships (LLPs), corporations, partnership, and sole proprietorship. The best way to decide which is best for your business would depend on your own circumstances.
Limited Liability Company: Although not mentioned here, another advantage of an LLC is that you don’t have to pay any tax on the income or any profits. An LLC is a closed corporation that has many advantages, one of them being that it protects the owners’ assets. In other words, an LLC is a more preferable option over a partnership or a sole proprietorship.
There are still many other advantages of a limited liability company including the ability to have limited liability. Limited liability means that you will only be taxed if your activity attracts enough revenue over your assets in a given year to make up for your liability. This makes an LLC preferable for many businesses.