Business

Types of Business – Which One Fits You?

It is a good thing that you want to start your business. Entrepreneurs and business owners like you fuel the economy. However, as an entrepreneur, you should know that starting a business from scratch is not easy. There are few things you need to know that will create a significant impact on your business venture.

Talking about the different types of business, are you even familiar with these? Do you have an idea which is which, and what best fits you the most? If not, then keep reading as we give you a tour of each type and see for yourself where you belong. 

Sole proprietorship

It is the simplest business type of all. If you want to run your company on your own, without any member or employee, this is the ideal type for you. It is also very easy to form.

Partnership

It is the total opposite of sole proprietorship. Instead of being alone, you have a business partner here, and you can share profits and responsibilities regarding your company. Typically, a partnership starts with two or more members. 

Corporation

It is one of the most extensive and most complicated types of business. If you are familiar with the term shareholders, they are the members of a corporation. Likewise, this is the best example of a fully-independent business. 

Limited Liability Company or LLC

One manager or few members could manage LLC. As a result, it could be a mixture of a corporation and partnership. However, it has liability protection that members could enjoy. It is also the ideal type of business for new entrepreneurs or startups.

Forming an LLC takes a process, which includes filing an Articles of Organization. LLC formation has a filing fee. If you plan to form an LLC in Nevada, you might be asking how much does an LLC cost in Nevada? The state requires entrepreneurs to pay up to $425 to the state‚Äôs secretary to form an LLC for their business. 

Nonprofit Organizations

This type of business is exempted from filing taxes, but they still need to follow a set of rules in running their business. Typically, nonprofit organizations dedicate their profits to help or for some charitable purposes. 

Few considerations on choosing the right business type for you

  • Liability. If you want personal liability protection, choose the type that offers it. LLC keeps your personal assets separated from your business actions, making them secured. Moreover, sole proprietorship and partnership types have associated liability over the whole business operations. 
  • Employee. There are business types where hiring employees will be hard as that of a sole proprietorship. If you have plans of hiring employees in the future, it would be better to have LLC or corporation type as early as today. 

  • Tax. Choosing your business structure will have an impact on your tax. You can choose to file such expenses or profits on your personal tax, while you can also opt to have it separated through business tax. LLC can be a good type of business when it comes to taxation. 

Key takeaways

Now that you have had a rundown of the different types of business, what do you think best suits you? Just a bit of quick advice for new entrepreneurs out there, if you plan to build your startup, go with an LLC type so you could have personal liability protection, which can make your investment safe. Likewise, an LLC is ideal if you have plans of expanding your workforce someday. 

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