One of the first challenges for new entrepreneurs is deciding what type of business they should register. Although there are different types of companies, the choice does not have to be difficult. These are the 7 most common types of business and some questions to help you choose the type of business that suits your startup.
One Man Business
Independent companies are the most common type of online business due to their simplicity and ease of design. A sole proprietorship is a company owned and operated by a single person. Registration is not required. If you run a sole proprietorship, the government automatically considers you a sole proprietor. However, depending on your products and location, you may need to register in your city or state to obtain a local business license.
An important point is that there is no legal or financial distinction between the company and the business owner. This means that, as a business owner, you are responsible for all the profits, responsibilities and legal problems of your business, usually there is no problem as long as you pay your bills and keep your business practices honest. If you open your own e-commerce business, a sole proprietorship is probably the best type of business for you. If you start a business with one or more partners, read on!
Two heads are better than one, right? If you start your business with another person, a partnership may be the right option. An association has many benefits: it can gather resources and knowledge, secure private funds and more. Remember that within a society the responsibilities and responsibilities are shared equally between each member. However, there are several types of associations (for example, limited partnerships, which are discussed in the next section) that allow you to define the roles, responsibilities, and responsibilities of each member.
A company requires that you register your business in your state and establish an official company name. After that, you must obtain a business license, as well as all other documents with which your state office can help you. In addition, you must register your company with the IRS for tax purposes. Although this seems like a complicated process, having a society has many benefits. So, if you are looking for a co-owner, don’t be afraid: many online businesses are established through partnerships. It is definitely worth having someone to help you start a new business.
Limited Liability Company
A limited partnership or LP is an off-session version of a general partnership, and although it is not as common, it is a great bet for companies that want to raise capital from investors who are not interested in working everyday aspects. deal. There are two types of partners in a limited partnership: the general partner and the limited partner. The general partner generally participates in daily business decisions and is personally responsible for the business. On the other hand, there is also a limited partner (usually an investor) who is not responsible for debts and does not participate in the regular operation of the company. Like a general partnership, when you enter into a limited partnership agreement, you must register your business in the state, establish a company name and notify the IRS of your new business. Again, this option is the most common for those looking for investment dollars. So keep that in mind when exploring your association options.
A company is a completely independent company composed of several shareholders who are given shares in a company. The most common is the so-called “Corporation C”, where your company can deduct taxes as an individual. The only problem with this is that your earnings are taxed both corporately and personally. But do not be discouraged by this fact, this is very common. If you currently work for a company with several employees, it is likely that this is the commercial structure used by these employees. If you start as a smaller company, especially if you only work online, it is most likely not available.
A non-profit organization explains itself, as it is a commercial organization that intends to promote educational or charitable purposes. The “non-profit” aspect comes into play in which the organization must save all the money earned by the company to pay its expenses, programs, etc. Keep in mind that there are several types of nonprofit organizations available, many of which can receive “tax-exempt” status. This process requires submitting documents, including an application, to the government to be recognized as a non-profit organization. Depending on the parameters of your new business, they can tell you in which category you are better.
The last thing on our list is what is known as a cooperative, or a business that is fully owned and operated for the benefit of the members of the organization that uses its services. In other words, what the cooperative earns is shared among the members themselves, and it is not required to be paid to any outside party, etc. Unlike other types of companies, which have shareholders, cooperatives sell shares to the “members” cooperative, which then has a voice in the operations and direction of the cooperative. The main difference in the process of becoming a cooperative, unlike the other types of businesses listed, is that your organization must create bylaws, have a membership application and have a board of directors with a meeting of founding members. This is one of the less common types of online businesses, although there are online cooperatives, such as the REI outdoor products store.
The business structure you choose for your start can affect your own role within the company. As a business owner, this is how each business structure will affect your overall role and daily activities.