Different Types Of Organizations Considering Their Legal Structure And Types
One of the most important decisions that any business would make at its inception will likely be the decision on the type of legal structure to use because the legal structure will determine a lot of things. For example, it will determine the amount of tax to pay, the kind of paperwork that will be needed and even the capacity to raise finances as well as the personal liabilities that you might have to contend with. Some regular types of business include sole trader, partnership, corporation and S corporation.
This is the most uncomplicated type of structure that any business can have. It requires only one individual who owns and operates it. In this kind of business, both the income and expenditure of the business are on the personal income tax return. The sole proprietor has absolute control of the business and the returns of the business can only be taxed once unlike other business structures. However, using this type of structure means that you have personal liabilities, this means that all the assets that the business has are at risk of any legal claims that there may be in the future. Furthermore, it is more difficult to raise funds for this kind of business because financial institutions are not always willing to give business loans to individual businesses.
This kind of structure involves more than one individual. There are two forms of…