Working for yourself can be rewarding in a way that almost nothing else can compare to. It does not matter if you started out in business for yourself or are newly considering this after a period of working for somebody else, the payoff can be significant. A great idea is often the catalyst for a new business venture, but there are semantics to consider as well. The legal pieces of the entrepreneurial puzzle deserve your attention and should be decided up as early as when you begin to draft your business plan.
This style is easy to form and gives you complete control over your business. If you do business activities but do not register as any other type of business then you would be considered a sole proprietor. By eliminating other people from your business structure, you have the chance to work on your personal brand and do not have to mold your business plan around the input of anyone else. While you would still be able to get a trade name, it can be difficult to raise money because you cannot sell stock and sometimes banks are hesitant to lend out to sole proprietorships.
If you are wanting to test out your business idea before making a full launch, this can be a good place to start. Keep in mind, however, that your business assets and liabilities are not separate from your personal ones. What this means is that you can be held personally responsible for the debts and obligations of the business.
If you are hoping to involve outside parties in the creation of your company, then a partnership is a really simple way to achieve this goal. Within this option there are two sub-categories that you can take advantage of, limited partnerships, and limited liability partnerships. Within a limited partnership, owners typically only have one general partner with unlimited liability, while the others experience liability that is limited. Limited liability partnerships give every owner limited liability, this protects each partner from debts against the partnership and they are not held responsible for the actions of their partners.
With a partnership you may want to have a backup plan for your personal finances in case business goes sideways. There is risk involved and even more so when you go into business with other people since you cannot control their choices and actions. If you end up in a financial struggle at home, consider selling your life insurance policy through a life settlement. You can review a guide on life settlement companies to explore and learn more about what this means for your personal finances.
Limited Liability Company
An LLC is a happy combination of the perks of both the corporation and partnership business structures. You will have protection in most instances from personal liability. If your LLC faces bankruptcy or lawsuits, your home, vehicles, and savings accounts will not be at risk. This would be a good fit for an aspiring entrepreneur who want to pay a lower tax rate than they would with a corporation and have significant personal assets they want to protect.