Talking About Business: A way of success
I have made a few assumptions
- First, I assume you want to turn a hobby into a business
- Or maybe you want to learn about operating a business
- Better still you want to expand on the current business you are operating
Four most common business structures are
- The sole proprietorship:
- easy to form and gives you complete control of your business.
- You’re automatically considered to be a sole proprietorship if you do business activities but don’t register as any other kind of business.
- do not produce a separate business entity.
- This means your business assets and liabilities are not separate from your personal assets and liabilities.
- You can be held personally liable for the debts and obligations of the business.
- the simplest structure for two or more people to own a business together.
- There are two common kinds of partnerships:
- limited partnerships (LP) and
- limited liability partnerships (LLP).
- C corp
- A corporation, sometimes called a C corp, is a legal entity that’s separate from its owners.
- Corporations can make a profit, be taxed, and can be held legally liable.
- Corporations offer the strongest protection to their owners from personal liability,
- but the cost to form a corporation is higher than other structures.
- Corporations also require more extensive record-keeping, operational processes, and reporting.
- S corp
- An S corporation, sometimes called an S corp, is a special type of corporation that’s designed to avoid
- the double taxation drawback of regular C corps.
- S corps allow profits, and some losses, to be passed through directly to owners’ personal income without ever being subject to corporate tax rates.
- C corp
- Limited liability company:
- An LLC lets you take advantage of the benefits of both the corporation and partnership business structures.
- LLCs protect you from personal liability in most instances, your personal assets — like your vehicle, house, and savings accounts — won’t be at risk in case your LLC faces bankruptcy or lawsuits.
- However, beware of PIERCING THE CORPORATE VEIL
- On rare occasions, a court will pierce the corporate veil to impose liability for an LLC’s debt and obligations on its members.
- Example: When company finances are not kept separate from those of members.
All in the BIG DREAM to make PROFIT
Let’s make it a discussion and we will try to address all questions