Entering into a business is not just all about a great idea. You need to be someone who can endure all the challenges you might face in the process of building your own business. Courage, dedication and a healthy dose of resilience are a few of the characteristics that a person should have. There is a long list of the points that should be remembered but one of the most essential part is that your approach when it comes to trading.
You need to consider a lot of factors in choosing the right structure for your business. A wrong selection can make everything go upside down in the blink of an eye. So, it is without a doubt really important that you take into consideration the positive aspects of functioning as a sole proprietor, an LLC or an LLP or even as a corporation in the end. Someone who wants to manage the business on their own will be a sole proprietor.
Being is a sole trader is known as the simplest way of doing business. A sole trader gets to keep financial records and file accounts and gets to use the profit however you want. Nevertheless, if you need the help of other people, take for example an employee, then you might want to take into consideration another different legal status for your business.
A common type of flexible professional business structure is LLP or also known as limited liability partnerships. Individuals who use LLP to establish their business are lawyers, accountants and other professionals. Each partner will has part int the business and gets a slice of the profit. Partners are also protected from liability as long as they do not become a managing partner.
The one that gets to enjoy lots of flexibility is the LLC or limited liability companies. The company is secured form financial debts and other responsibilities. An LLC is not the same as a corporation but a legal company that gives limited liability to its owners. There is a lot to know more about LLC and ask a registered agent to know more.
And obviously, just like almost everything in this world, these different business structures have its own pros and cons. Managing as a sole trader is only suitable if you are operating alone. You can get immediate access to any profits you make. However, you are personally responsible for all the business’ debt.
A limited partnership, despite the fact that it offers a lot of flexibility and is quick to set up, can still make arguments arise. Only one person is responsible for the liabilities but one wrong move of a partner is a liability of another partner.
A limited liability company does not have the credibility of a larger corporation and there is a lot of task attached to an LLC.
As you can see, each business entity has its own pros and cons so it is better to not decide immediately.