14 Jan Whats the Right Formation For My New Company
Different Kinds of Business Entities
The kind of entity you select is going to rely on a few main factors: taxation, liability and record-keeping. The following is a quick review of the differences between the most used business entities:
A sole proprietorship is the most popular business entity. It’s simple to create and provides full managerial control for the owner. The owner is still liable personally for any of the business’s financial obligations.
A partnership is made of up two or more people who accept the sharing of the profits and/or losses of a company. A main benefit is that the partnership doesn’t take up the tax burden for revenue. One of the primary disadvantages is how each partner is liable personally for the business’s financial commitments.
A hybrid type of partnership, the LLC, is increasing in popularity due to how it lets owners take advantage of the advantages of a hybrid type of business entity. The benefits of this kind of format is how the profits and losses are able to be passed to the owners without added taxes to the business itself. Owners are also shielded from any personal liability.