Legal Structure W6

  This week we learned about the possible legal structures of business, and we also reviewed the license and tax obligations that we will incur.

Some of the main differences of the different business structures pertain to the tax responsibilities, ownership, and liabilities. The two most viable options of business structures for starting a small business are, in my opinion, limited liability company (LLC) and sole proprietorship.

An LLC is a general partnership in which no member is individually liable for the obligations of the company. The LLC consists of members, managers, and employees. LLCs are created by filing a Certificate of Organization.

Sole proprietorships are formed by persons that own all or most of the business property and assets. A sole proprietor has the right to make all the management decisions and is also liable for all the obligations of the business. No formalities are necessary to form a sole proprietorship, it can be created simply by starting to conduct business. This form of business is considered an extension of the owner, so it dissolved once the owner retires, becomes disabled, or dies.

I chose sole proprietorship as the structure for my business because it is the least expensive, it can be changed to a different business structure, if necessary, it is highly transferable, it is the easiest to set up, and the business I’m setting up is low risk.

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