How To Choose The Best Legal Structure For Your Business

Published on: 15 April 2022 Last Updated on: 05 May 2022

Starting a business can be exciting, scary, and – let’s be honest – confusing!

You don’t need an MBA or any other business degree to start a successful business. But, there are other important things that you need to make right from the beginning.

While there are many things that need to be done correctly from the start of the business, there is one thing where you cannot make a mistake Choosing The right business structure.

Your business structure is important in many ways. It decides how your business will showcase in front of others, what power you will have over your business, and most importantly, what type of taxation it will fall under.

Seeing how the current entrepreneurs are so hung up on sole proprietorship that they do not see the benefits of other business structures.

Today, we have come to take you on a journey and make you see the different business structures and what each offers to a business.

What Is A Legal Structure Of A Business?

Every new business requires the formation of a business entity that can be considered its identity in the market. This is where the concept of a legal structure comes in.

A legal structure, also known as a business ownership structure, determines the flow of power within the business, the type of income tax you need to file, and highlights the risk to which your business is exposed.

The most common legal business structures are as follows:

Sole Proprietorships.
Partnership.
Corporation.
Cooperative.
Limited Liability Company (LLC).

Types Of Business Structure

While there are many legal business structures, we have picked the most used currency in the world. This Legal Structure covers almost every aspect of legal business structure.

1. Sole Proprietorships

This is the simplest form of legal business structure. In this type of business structure, one individual is solely responsible for the business profits, debts, and liabilities.

This business structure works great for small to medium-scale businesses. This entity does not offer separation or protection of any personal and professional assets. While this is great for small businesses, it might be difficult to scale up.

2. Partnership

As the name suggests, this type of business structure is owned by two or more individuals. The legal partnership structure can be further divided into two entities: General Partnership and Limited Partnership.

A general partnership is where all the shares are equally divided among all the partners.
In a limited partnership, one individual has control over all the business operations. While others are just contributors and shareholders for the profit.

3. Corporation

When a business is considered a corporation, it becomes a separate entity from its owner by law. It is considered a separate entity that enjoys legal rights just like any other person.

For instance:

It can sue others.
It can be used.
Buy and sell a property.
It even has the right to sell the right of its ownership.

4. Limited Liability Company (LLC)

A Limited Liability is a hybrid structure that allows owners, partners, and shareholders to limit their liability while enjoying the tax and flexibility of a partnership business model.

Under the umbrella of the LLC, members of the business are shielded from any personal liability related to the business as long as they have a written LLC Operating agreement contract.

However, to do that, the business needs to have the best business bank accounts with all the necessary features.

5. Cooperative

A cooperative business legal structure follows the concept of serving the same people who are working for the business. All the members are responsible for making business decisions, and whatever the profit business samples, it is shared among the members.

A cooperative business structure offers the following advantages.

Low taxes.
Increased funding.
Better discounts and services.

Factors To Weigh Before Choosing A legal Business Structure

While an individual can choose any business structure they like, there are a few considerations you need to look into.

1. Complex Procedure

Businesses with fewer people don’t need complex procedures to rule their business operations. Instead, they can just follow a simple business format.

However, if your business has many employees and offers different types of services, you must select a business structure that can support all your business requirements.

The best way to understand what kind of legal business structure you need is essential that you understand the goals and a business structure that help you achieve the least complexity.

2. Continuity Of Existence

You are not starting a business with a lifespan of only a decade. That means, while you are planning for your business, you must plan for its continuity. Hence, it is important that you see how a business is concluding.

If you are thinking of securing your business for future financial security, you must also look into the right business structure to support your needs.

3. Control

Business is all about control. If you cannot control how your business is operated, you will never be able to calculate the ROI at the end of the day. Hence, it is essential to decide how much control each individual requires to operate the business.

For instance, if someone wants to have more control over their business, sole proprietorship might be a more suitable business structure.

4. Liability

When running a business, you need to ensure that your personal liabilities are not tied down with your business. In that case, what will happen is that your personal liabilities will be used to cope with business losses.

Hence, to separate your business from your personal liabilities, choose a legal business structure that protects your personal assets.

Conclusion

Choosing a business structure is dependent on what you want to achieve from your business. Depending on what you want from your business, you can go with any legal business structure.

While you are free to decide for yourself which business structure you want to go with, it is a good idea that you take help from a business lawyer.

A business lawyer can help you understand the differences and benefits more detailedly. They will even help you with all the paperwork needed to establish your business as a legal entity.

Read Also:

Arnab

Arnab is a professional blogger, having an enormous interest in writing blogs and other jones of calligraphies. In terms of his professional commitments, He carries out sharing sentient blogs.

View all posts

5 Things to consider When Choosing a Footwear Manufacturing Company

When you’re in the business of making and selling shoes, the reliability of the product you stamp your brand’s logo on relies majorly upon the quality of the shoes and how they are manufactured. Once you have the design of your shoe ready to go, finding a manufacturer that will rise to the task of modeling the shoe precisely from your design is one of the most important undertakings. Below, leading footwear manufacturer, HS Footwear Co. lists five things to look out for when choosing a footwear manufacturing company: 1. Price: As with all business, profitability is one of the most important aspects to pay attention to. Look at the minimum order quantity (MOQ) requirement that the supplier has. MOQs for footwear can be distributed between order, color, material, style or size of the shoes. They can range from anywhere between 1,000 pieces to 100,000 pieces per order. MOQs for the footwear industry tend to be higher than most other industries. 2. Regulations: Making sure that the manufacturing company is compliant with the footwear regulations in the country its factories are in is important when regulating the quality of your product. Product regulations include the general safety of your marketable product, labeling requirements, and chemical regulations. 3. Type of Shoes: Some manufacturing companies only manufacture custom, built-from-scratch shoes while others only manufacture large private labels that already have basic product designs in the rotation. When choosing the right supplier for your shoes, it is essential to choose the right company for your shoes- whether they are athletic or dress shoes or stilettos or flip flops. 4. Reliability: The key to any business is having a reliable supplier. Going through the history of sales with the shoe manufacturer and accessing if their deliverables were met on time is of paramount importance. Sometimes reliability is based on how large your order is with the company or the size of the manufacturing company itself. You may get more attention if you place a large order with a small company, but you may have more reliability from a large company that has ample facilities to deliver on the agreed-upon date. 5. Location: When looking for the right manufacturing company for your shoe brand, location can play a big part in the decision. From cost issues to delivery dates, everything is impacted by location. If you decide to choose a supplier who is located internationally, it would prudent to research freight policies and taxes imposed upon your product by the respective country. Typically, international footwear manufacturing companies are well versed in exporting products and negotiating shipping terms with them may lead to overall cost savings. Shoes are a necessity for people around the world and manufacturing shoes has become an international business. Ultimately when you are looking for a shoe manufacturer, price, regulations, the type of shoes you want to sell, reliability and location are things to definitely consider. Read Also: Top 6 Formal Shoes Under $100 How To Lace Running Shoes For Plantar Fasciitis?

What Are The Various Strategies For Success In Auditors’ Aptitude Testing?

Auditors are the gatekeepers of financial integrity, who are entrusted with the critical task of ensuring that businesses' and organizations' financial records are accurate, transparent, and compliant with regulatory standards. Moreover, the role of an auditor demands not only a strong foundation of knowledge but also a keen aptitude for navigating complex financial data and making informed decisions. Aptitude testing is one areas that brings in the necessary transparency. To identify and nurture this aptitude, auditors aptitude testing is a pivotal step in the selection process for aspiring professionals in the field of auditing. In this article, we will explore the various strategies that candidates can employ to succeed in auditors aptitude testing. These strategies encompass a range of preparations, test-taking techniques, and the right mindset. Some Strategies Which Is Necessary To Know During These Tests Lets try to look at some of the strategies that are necessary for your knowledge-building. Comprehensive Study Plan : A comprehensive study plan is the backbone of your preparation. Moreover, this self-assessment will help you determine which areas require the most attention and what your strengths are. Based on this assessment, create a study plan that outlines the topics to be covered, study materials, and a timeline for preparation. Topic Selection : Make a list of all the subjects or areas that will be assessed in the aptitude test, such as financial knowledge. Also consider the analytical skills, critical thinking, mathematical proficiency, and communication skills. Study Materials : Identify the textbooks, online resources, and reference materials you will use for each topic. Keep in mind it is essential to select reputable and updated sources that align with the specific content of the test. Study Timeline : Allocate sufficient time for each topic based on its importance and your existing knowledge. Now, create a schedule that covers all the subjects adequately, with more time dedicated to areas where you need improvement. Mock Tests : Mock tests serve as a bridge between preparation and the actual test. These practice exams mimic the format, content, and time constraints of the real assessment. At the same time they provide a platform for candidates to familiarise themselves with the testing environment and evaluate their performance. Realistic Simulation : Seek out practice tests that closely resemble the actual exam in terms of content and structure. This will help you get a feel for what to expect on test day. Timed Practice: One of the critical aspects of mock tests is time management. By practising under timed conditions, you can refine your ability to allocate time appropriately to different sections and gauge whether you are keeping pace with the test. Performance Analysis : After completing each mock test, review your performance in detail. At the same time, identify areas where you excelled and, more importantly, areas where you struggled. This self-assessment is invaluable for refining your study plan. Time Management Effective time management is a skill that can significantly impact your performance in auditors' aptitude testing. Moreover, these tests are often time-sensitive, and poor time management can lead to incomplete sections or rushed, inaccurate responses. 1. Sectional Time Allocation : Develop a strategy for how much time you will allocate to each section. Typically, this allocation should be based on the number of questions and the weight of each section in the overall score. 2. Time Tracking : During your practice tests, continually monitor your progress to ensure you are sticking to your time allocation. Now, if you find yourself falling behind, consider adjusting your strategy. 3. Pacing : Learn to pace yourself. If you encounter a challenging question that is consuming too much time, consider marking it for later and moving on to easier questions. You can return to the challenging questions after completing the rest of the section. 4. Managing Stress : Test anxiety is common, but there are strategies to manage it. Techniques such as deep breathing, visualisation, and positive self-talk can help reduce stress on test day. Strengthen Your Financial Knowledge As financial knowledge is a significant component of the test, it's imperative to strengthen your understanding of the core financial concepts that underpin auditing. 1. Core Concepts: ocus on core financial concepts, including accounting principles, financial reporting, and auditing standards. Ensure you have a solid grasp of these topics as they form the foundation of auditing. 2. Educational Resources: Consider enrolling in courses or workshops that cover these foundational concepts. These resources can provide structured learning and expert guidance. 3. Practice Problems: Solving practical financial problems and working through case studies can reinforce your financial knowledge. It allows you to apply theoretical concepts to real-world scenarios. 4. Self-Belief: Believe in your abilities and the efforts you’ve put into preparation. Confidence can help you stay focused and perform to the best of your abilities. Improve Analytical Skills : Analytical skills are vital for auditors, as they are central to identifying discrepancies and irregularities in financial data. Real Data Analysis: Regularly work with financial data to hone your analytical skills. Analyse balance sheets, income statements, and cash flow statements from actual companies to develop your ability to identify patterns and anomalies. Case Studies: Engage in case studies that present complex financial scenarios. These exercises will challenge your analytical abilities and provide practical experience. To further enhance your skills, consider practicing with audit aptitude test questions. Guidance and Feedback: Seek guidance and feedback from mentors or experienced auditors to fine-tune your analytical skills. They can provide insights and tips to help you improve. Conclusion Preparing for auditors' aptitude testing is a significant step in one's journey to becoming a successful auditor. The multifaceted nature of these tests, which encompass financial knowledge, analytical skills, critical thinking, mathematical proficiency, communication skills, and time management, demands a well-rounded approach to preparation. This article has outlined a range of strategies to excel in auditors' aptitude testing, providing a comprehensive roadmap for success. The strategies, including comprehensive study plans, mock tests, time management, strengthening financial knowledge, and enhancing analytical skills are designed to equip candidates with the skills and knowledge required for these rigorous assessments. So apart from this if you want some more help from us, then visit Mercer | Mettl at least once. Mercer | Mettl serves as an instrumental resource for candidates preparing for auditors' aptitude testing. It complements the strategies outlined earlier by offering customized assessments, realistic simulations, detailed performance analysis, and time management practice. With the assistance of Mercer | Mettl, candidates can enhance their preparation and increase their chances of success in auditors' aptitude testing. Additional Reading: 4 Tips To Maintain Your Fleet Deep Dive Into Project Management With Informative Podcasts The ROI Of Proactive Pest Control For Property Management

Doing business in the UAE: pros and cons

The United Arab Emirates (UAE) has a form of federation that consists of 7 emirates with own ruler in each of them. The state is a major financial and economic center, which policy is focused on attracting foreign investment into the country, therefore, the most comfortable and favorable conditions for doing business are created here. The UAE continues to attract investor interest from different parts of the world. Thousands of expats from the US and UK are now migrating to the UAE to explore setting up new businesses and cater to an affluent target audience. If you are looking to set up a new business in the UAE, and are looking at networking and funding solutions, please visit website. The following types of companies are currently available for business registration in UAE: Local companies (where 51% of shares necessarily belong to the citizens of the Emirates or legal entities owned by citizens) – are able to do business without restrictions on the territory. Free zone companies – are able to do business within the chosen free zones or abroad. Offshore companies (International Business companies) – are prohibited to conduct business within the UAE territory, but are able to open an account in the UAE bank. Opening an offshore company in the UAE on the example of RAK free zone: Located in the northern part of the UAE, bordering Oman, Ras al-Khaimah (RAK) is one of the smallest emirates of the UAE. Great interest in the financial and investment sector of this emirate was promoted by new legislation and regulations adopted by the UAE authorities. This, in turn, led to business and investment opportunities for individuals and companies around the world. An International Business Company in RAK free trade zone can do business outside the territory of the country, own property in the UAE, be used as a logistics company, maintain bank accounts, and much more. Basic requirements for opening such a company: the minimum paid-up share capital - 10,000 AED; the minimum number of shareholders – 1; the minimum number of directors – 1; local office requirement – no; annual reporting requirement – no. Required documents for registration: Certified copy of a valid passport (or national identity card); certified address confirmation - utility bill (not older than 1 month) in English or Arabic (or official translation); A letter of recommendation from the bank (not older than 1 month). Advantages of doing business in the UAE: The main advantages include: Absence of income tax and corporate tax; Permitted 100% foreign capital, no need for a local sponsor (except for local companies); There is no requirement for mandatory audit (except for some free-zones and local companies); A high degree of data protection on the ownership of companies; The ability to work in the country (with the exception of offshore companies); The ability to open accounts in local banks without legalizing corporate company documents; The right to obtain a Dubai residence visa or residence visa in other Emirate for shareholders and employees of the company; The possibility of obtaining certificates of tax residency under agreements on the avoidance of double taxation (for free zones and local companies). The ability to obtain a residence visa is one of the main advantages of opening a company in the UAE. It can be obtained by a non-resident individual on the basis of the acquisition of real estate, as well as the registration of a company in the free zone of the UAE. Such a visa is issued for a period of up to 3 years with the possibility of extension and gives the right of permanent residence and work in the country. In addition, UAE banks do not transfer information within the framework of the Common Reporting Standard exchange, if the bank has accounts of companies registered in free zones or personal accounts of shareholders and managers who have resident visas - as they are recognized tax residents of the UAE in the framework of the current legislation of the country. Read Also: Investments 101: How To Choose A Smart Stock Choosing A Quality Prep Center For Your FBA Business

How To Choose The Best Legal Structure For Your Business

What Is A Legal Structure Of A Business?