Trying your luck at entrepreneurship is more like a lifetime experience, something worth considering while growing up. Therefore, it is good to plan out your future and opt for entrepreneurship. Starting your own business is better than working nine hours a day for someone else. After all, the thrill of being your boss is what you need right now.
Stepping into entrepreneurship is prodigious, but having inadequate knowledge about it can cause numerous issues. To deal with ongoing market challenges, you must know about different types of corporations and which one is best for you.
When it comes to choosing the ideal business entity, there are numerous corporations to consider. All you have to do is identify which entity aligns well with your goals and proceed ahead with it. It is essential to learn about different business forms and compare them to make an informed selection. Similarly, people who get qualified in business administration know-how to run corporations and manage them. Gaining extensive knowledge about business is a lifetime opportunity, and you should avail it right away. You can efficiently study online and pursue your master’s in business administration with zero restrictions. Some master’s degrees do not require a GMAT score, and they are AACSB accredited for your convenience. You can enroll in such degree programs without any hesitation. So why not try to broaden your understanding of different business entities by doing an online mba no gmataacsb program from a reputable organization? The goal should be to become a qualified professional who is capable of operating a successful business.
Here are six types of corporations that you can look into and see which one is the best for your startup.
1. Sole Proprietorships
It is the most frequent form of business, in which you own the whole thing. The business got named after the owner, and you are responsible for the majority of the firm’s costs. Just like that, you are responsible for different business liabilities, and all the profit belongs to you. You are a sole player, which comes with some pros and cons. Working as a sole proprietor is the most significant advantage because you do not work for others but only for yourself. However, working alone means accidentally merging your business expenses with personal ones, leading to financial issues.
As a sole proprietor, you can hire contractors or full-time employees who work under your supervision. If your business is a small-scale one, opting for a sole proprietorship can reap some fantastic results.
2. Having a Partner on Board
Why work alone when you can have a partner and let them help you in flourishing the business? It means having two or more brains instead of one, with the opportunity to make better decisions for the business. Everything gets shared among the partners in a general partnership, including shares of assets, profits, losses, and legal obligations. Not just that, but every single partner is responsible for legal and financial damages in the business, with the risk of putting personal assets at stake. Regardless, setting up a general partnership is pretty easy as there is hardly any paperwork involved.
If you want to appear more professional and sounder in the business world, opt for a general partnership. Having qualified business professionals with promising investment on board can help in future business growth.
3. Limited Liability Company (LLC)
In a sole proprietorship or partnership, you do not get any form of security from business liabilities. However, as a limited liability company, you form a legal business structure that protects liabilities. Here, you are not responsible for paying off liabilities with your money. Personal expenses get separated from business expenses, and the members are not held accountable for financial damages.
Forming an LLC is beneficial, but it requires a lot of paperwork. You have to lay out the entire business structure in the article of incorporation. Here, you can either choose an equal partnership or have a good board of directors to take future decisions.
If you plan to keep some control over yourself and not go public, an LLC is an excellent option to boost your business image.
4. Non-profit Organizations
A non-profit business structure is similar to a traditional business entity. Generally, some donors are supporting the organization and a board of directors. A non-profit organization does not generate any profits (as the name suggests). It gets generally created to support a cause.
Such organizations are not liable to pay any taxes, unlike other business entities. They are also allowed to receive funds from different sources, like public donors, private donors, grants, and corporations. If you are passionate about helping the general public or plan on solving societal issues, opt for a non-profit business structure. It is undoubtedly the best way to turn your mission into reality.
5. C and S Corporations
A-C corporation is similar to an S corporation, but there is a significant difference between the two. As a C corporation, you have to pay taxes on your income and employee’s income. However, you are not liable to pay taxes in an S corporation as the shareholders manage them. Opting for an S corporation is more complicated than a C corporation as shareholders avoid paying any taxes. There are many loopholes in this type of business entity, which require immediate attention. Additionally, suppose you plan on selling your business after a specific period. In that case, a C corporation is a beneficial way to do that.
The Bottom Line:
All of the corporations mentioned above allow you to move forward. Now, it is up to you which business structure to choose and how to manage it effectively. So take your time, do thorough research over these business entities, and see which one is the ideal corporation. Always remember that choosing the right business structure for your startup is a game-changer, so choose wisely.