It is a business run by a single person for its own benefit. This is the simplest form of business organization. The property does not exist outside the owners. The liabilities associated with the corporation are the personal liabilities of the owner, and the business ends with the death of the owner. The owner assumes the risks of the business to the extent of its assets, whether they are used in the business or owned by individuals. In most cases, taxed as a partnership; Business forms should be used if there are more than 2 of the 4 business characteristics, as described above. A general partnership is more complex to organize than a sole proprietorship, but involves fewer formalities and legal restrictions than a limited partnership, a joint-stock company or a limited liability company. The basic elements of company law are laid down by law, but most questions can be decided by agreement of the partners. A written partnership agreement is highly recommended, but is not required by law.
The factors to be considered in a partnership agreement are listed in a later section of this manual. The partnership agreement does not have to be submitted to a government agency. Note that under the revised Uniform Partnership Act (RUPA) of 1997, Minnesota Statutes Chapter 323A, partnerships have the option to file certain declarations with the Secretary of State regarding the authority and responsibility of the partners, as well as the status of the partnership. An overview of the four basic legal forms of the organization: sole proprietorships; Partnerships; Companies and limited liability companies follow. Please also read this summary of the non-tax factors you should consider. Individual owners include professionals, service providers and retailers who are “in business for themselves.” Although a sole proprietorship is not a separate legal entity from its owner, it is a separate entity for accounting purposes. The financial activities of the business (e.g., receiving fees) are conducted separately from the person`s personal financial activities (e.g., paying for the house). One of the first decisions you will make as an entrepreneur is how your business will be structured. You need to know the pros and cons of each of the different forms of business organization to make sure you`re making the right decision for your new business. Prior consultation with legal counsel can help founders determine which approach is best for the business. For more information about incorporation, see the section of this guide titled Starting a Minnesota Trading Company. A corporation is a legal entity that operates under state law and whose scope of activity and name are limited by its articles of association.
The articles of association must be submitted to the State in order to incorporate a company. Shareholders are protected from liability, and shareholders who are also employees may be able to enjoy certain tax-free benefits, such as health insurance. There is double taxation with a C corporation, first by income tax and then by shareholder dividend tax (such as capital gains). A company approved by the State in which it has its registered office is legally considered to be a single entity, separate and distinct from those who own it. A corporation may be taxed; it may be prosecuted; it may make contractual arrangements. The owners of a company are the shareholders. Shareholders elect a board of directors that oversees key policies and decisions. The business has a life of its own and does not dissolve when the owner changes. 17. All of the following are the main strengths of a company, EXCEPT that there is very little case law to guide organisational and operational decisions, although limited liability company law is modelled on company law. For this reason, owners of a limited liability company may often need to consult with their professional advisors, which increases their costs. You create the users that are listed in the following table Which users receive the This is an important decision that has long-term implications, so if you`re not sure which form of business is best for your business, consult a professional.
Fortunately, there are several consultants and business centers throughout Kansas City that offer free assistance in starting a well-informed and helpful business. When starting your new business, consider the following: – Your (practical) view of the size and nature of your business – The level of control you want to have – The level of “structure” you are willing to face – The vulnerability of the company to litigation – Tax implications of different organizational structures – Expected profit (or loss) of the company The owners are members, and the duration of the LLC is generally determined when the organization`s documents are filed.