Business Entities

Owning a business, organization or franchise is not as simple as one might assume. There are many things to consider when opening a business - the first and most important choice to make is what form of business - or what type of business entity - the company will take.

There are approximately six forms of business entities that are most commonly undertaken and these are: sole proprietorships, limited and general partnerships, publicly held or close corporations, limited liability companies (LLCs), limited liability partnerships (LLPs), and franchises. The "best" form of business entity depends entirely on the type of business being run, the relationship between the owners/shareholders and the goals of protection that each shareholders wishes to maintain. All forms of business entities must be agreed upon by its members, making member preference more important than anything else.

Limited Liability Partnerships and Companies:Limited liability corporations and partnerships are probably the "smartest" ways to do business (unless one is a sole proprietor in which case that individual is responsible for everything related to the business) because of the protection that the limited liability provides to shareholders.

English: SOA Entity Abstraction Pattern Diagram A

English: Jolliffe Cork Accountants Jolliffe Cork C...

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Whether a company becomes a corporation or remains a partnership also depends on member preferences and what their goals are. Most business have the potential to reach a huge amount of growth and maintain a huge amount of capital, if managed correctly and if there is a public need for the business. However, it may be the desire of the owners to keep the business on a smaller scale - this could provide for more legal security in the eyes of the owners. While deciding on and forming a business entity is important, it's most important for the stakeholders involved to fully understand what the business form means to them as individuals and...