Business Ownership: Sole Proprietorship and Partnership

There are several ways to organize your business ownership:

• Sole proprietorship
• Partnership
• Limited partnership
• Limited liability company
• Corporation (for profit)
• Nonprofit corporation
• Cooperative

Sole Proprietorships

If you a starting a new business, the best initial ownership structure is often a sole proprietorship or a partnership, if there is more than one owner. A sole proprietorship is a one-person business that is not registered with the state. All you have to do is go into business with yourself. The law views the business and owner as one and the same, meaning that you would report business income and taxes on your personal tax returns and are personally liable for any business-related obligations.

Partnerships

Like a sole proprietorship, a partnership is a business owner by two or more people that has not filed paper to become a corporation or a limited liability company. A partnership begins the moment you start a business with another person. The business owners pay taxes on their shares of the business income on their personal tax returns. Each partner is personally liable for the entire amount of any business debts or claims.

Liability

A business ownership like a sole proprietorship or partnership is a good route when the personal liability in a business is not a huge concern. A small service business in which you are not likely to be sued or one in which you will not be borrowing a great deal of money for inventory are ideal for these types of ownership.

Learn More

Starting up your own business can be overwhelming. For more information visit www.businessdirectoryforyou.com