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.

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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.

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5 Tools That Can Help You Get Your Business Organized

Keeping a business organized often feels like a futile task. There’s always something to do and it can feel impossible to take care of everything. Maintaining a high level of organization impacts everything about your company, from efficiency to effectiveness. You can’t afford to let your firm’s operations run away from you. But there are plenty of online tools available for you to manage every aspect of your business. We’re going to take a look at some of them now. 1. Slack : Project management is often a battle in itself. Slack allows you to make sure that everyone knows what they’re doing and the progress of every project. You can collaborate on tasks of any size and create special boards where only certain members have access. Take full control of any project by assigning administrative privileges to your managers. It’s an easy way to manage your next project. 2. Profisee : Talk about master data management and you might think that it’s just an IT thing. This couldn’t be further from the truth. Master data management is all about keeping the various bits of data within your business efficient, clean, and useful. Through proper master data management, you can find out the answers to important questions like, “Which of my customers are the most profitable?” Profisee makes it easy to understand what master data management is and how to begin implementing it in your small business. 3. Evernote : A big favorite among small business owners is Evernote. It organizes your thoughts on the go and enables you to keep track of everything. Furthermore, your notes can be organized and converted into a layout that’s suitable for presentations. The sheer number of different options for this is impressive. 4. Asana : Virtual online businesses are becoming more common. Even brick and mortar businesses are turning to remote workers. But communicating by email can often be difficult. Asana allows you to communicate across the globe without the need for email. Conversations are organized based on a specific task. It can also double as a project management app if you prefer. This means you can assign people to specific tasks and receive status updates pinged to any WiFi-enabled device. 5. Tripit : Business trips are a necessary evil. Tripit keeps everything from flight itineraries to hotel reservations in one place, and they’re tied to a calendar. Easily share these updates with your inner circle to allow them to plan around your visit to that client or the next big industry conference in Vegas. Last Word – How to Keep Your Business Organized : The organization isn’t just confined to a few areas of your company. This is the biggest mistake business owners tend to make. They often organize a single part of their business, such as their finances, but fail to properly manage the other parts of it. Inevitably, this leads to problems and invalidates their previous work. Don’t fall victim to that by picking up these five tools today. Do you have any tools you use to keep your business organized? Read Also : 7 Reasons Why Your Business Needs A Mobile App How To Master Social Media For Businesses & Entrepreneurs Relocating Your Business To Downtown Toronto? Read This First

Why You Should Choose To Have An Asset Protection For Your Business

Business owners focus so much on accumulating wealth but spend very little time protecting their assets. But the sad truth is that we live in a lawsuit-frenzy society and as a business owner you are ever vulnerable to many risks that can put your assets – home, savings, and business – at stake. Why asset protection is vital? Nowadays, having a solid asset protection plan is not an option but a necessity. And this is true not just for business owners but to anyone who may be perceived to own substantial assets. If you are a potential target of creditors, lawsuits, or any other legal threat, planning asset protection should be a priority. Basically, asset protection strategies help safeguard your assets and wealth from potential attacks in the future. Contrary to what many people think, it is not only your savings and properties that may be at risk in case of an unfair adjudication. Everything that is of value, including business interests, real estate, investment properties, commercial properties, intellectual property, and other properties such as cars, art, boats, art, and jewelry, can be targeted by creditors. The good news is that there are specific asset protection strategies that can help secure a different type of assets. When you implement the right measures, you can rest assured that your assets are safe even in the face of lawsuits and liabilities. Who needs asset protection? A common misconception people have regarding asset protection is that an individual first needs to have significant wealth to start devising a plan. But the reality is that lawsuits can be filed not just against businesspeople but to anyone, regardless of backgrounds and levels of affluence. As long as people think that you own substantial assets, you can be targeted with frivolous lawsuits. Some individuals who may need asset protection include: Young entrepreneurs who wish to secure their assets before entering into a risky venture; Retirees preserving their assets for their beneficiaries; Individuals protecting their properties from growing medical bills; Individuals engaged in a profession with a high degree of liability (medical professionals, real estate investors/developers, lawyers, financial advisors, accountants); Debtors and/or guarantors; Business owners running a business with the poor financial state; Individuals from the affluent class with assets from around the world; Married couples with a souring marriage that is heading to divorce; Individuals facing a possible tax or other government liability; Business owners whose business may be affected by new laws or create new liabilities not covered by any insurance; People about to receive or have gained a substantial amount of wealth through inheritance, vesting event, corporate success, business acquisition, etc.; and People expecting a lawsuit or at high risk of being sued. Basically, everyone who has accumulated any asset will eventually need asset protection. How to protect assets? As mentioned above, different strategies can be used to protect your assets. They can be classified either as domestic or offshore. Domestic asset protection strategies involve the use of domestic laws and business structure. The simplest is choosing the appropriate business entity, such as corporations, limited partnerships, and trusts. As stated by an asset protection consultant at CS&P, by registering a business entity, you can benefit from having a corporate veil that completely segregates business and personal assets. This protects your assets in case of lawsuits and other liabilities. Other asset protection measures that leverage domestic laws include the proper use of contracts and agreements, purchasing appropriate insurance policies as well as umbrella insurance, segregating assets and assigning them to a spouse, and using homestead exemption. A comprehensive estate and trust planning can also provide a solid form of asset protection. It is recommended to do trust planning before you establish a new company. Offshore or international asset protection strategies are among the most successful methods to preserve your wealth. These are very confidential and secure ways of shielding your assets. This involves the establishment and transfer of assets to a corporation or trust based in a foreign territory. However, the process can be quite daunting, especially for those unfamiliar with its intricacies. It requires the help of experienced asset protection specialist to ensure that the process complies with the laws of both the origin and destination territory. Read Also: Substantial Tips On How To Invest Your Money Responsibly Small Business Guide To Private Health Insurance Exchanges

Here Are the Benefits Of Continuous Learning

Have you read a book since you graduated from school? Well, continuous learning is an ideal option for people who want to grow economically and mentally. Therefore, it’s essential to continue reading enlightening materials even after completing your exams. If you do some research, you will notice some essential things that would help improve your work performance that you didn’t know about. Imagine a situation where you're provided with the learning material, including a video that you can use to increase your performance. A coaching platform gives you access to virtual videos that can help you pick up subjects quite quick. The virtual practice allows you to acquire training on the areas that you missed. For example, if you're a doctor and you lack certain clinical practices, you can use a coaching platform. You'll have the tips that you require and shown practical virtual videos to help you understand. Reasons Why You Should Consider Continuous Learning via a Coaching Platform: 1. Business sustainability: Hiring a new employee who has the skills that your current employee lacks is costly. However, if you train your existing team, your company will have better productivity. This way, you’ll be retaining your employees’ talent in addition to the new skills they gather from a coaching platform. This is especially important because your company has constantly fluctuating needs, and therefore, require new skills in conjunction with the preexisting skills. 2. Increase in team-spirit: A group of people working together churns up better results as compared to people who work individually. Similarly, if you train your team together, they may understand the information differently but still work as a team to achieve the company's goal. Also, they will acquire leadership skills and know-how to deal with stressful situations as a team. 3. You are provided with resources: A coaching platform gathers information based on individual team requirements. So, if you're a team of doctors who need to know how to clean a kidney before transplanting, you'll find information prepared specially for you. The same is true for the sales team. So, virtual practices are specifically designed to help teach you how to reach the goal that you're trying to achieve. 4. Provide room for innovation: Business competition is growing rapidly. If you don't have innovative tips to help you stay at the top, other business will surpass your business, leaving it to fall or stagnate. However, if you enroll in a coaching platform, you'll learn practical innovation tips and effective methods of improving your business performance. This will lead to company prosperity. 5. Helps in decision-making and behavioral change: Every day, you make decisions that influence the future outcome. Unfortunately, you'll find some managers making better decisions that lead to massive company growth. So, unless you learn the tips that will work for your company, you might fail. On the coaching platform, you'll learn how to make decisions if presented with a specific situation. Also, it will help you change how you perceive and behave when presented with different situations. Conclusion: Knowledge is power. It's a propeller to better life performance. Therefore, ensure you book an online learning platform where your team will continually learn what is required to fill the business gap, thus, leading to prosperity. Read Also: 5 Key Leadership Skills For Entrepreneurs

How To Choose The Best Legal Structure For Your Business

What Is A Legal Structure Of A Business?