Critical Miss: Issue 2 [Rules For Owning A Business]

Rules For Owning A Business

Legal Structure

1. Sole ownership

One person owns the business, he has all the powers and responsibilities. There is no distinction between his assets and those of the business.

2. General Partnership

Each partner has a number of shares in the business, which usually relate to the amount of money they put into it. They split the profits according to the number of shares held. Legally they are each equally responsible for the obligations the business may have.

3. A Limited Partnership

This consists of two groups, general & special partners. Special partners provide most of the financial backing and then quietly collect their share of the profits. General partners usually provide the idea behind the business and most of the work to run it.

4. Stock Company (Corporation)

It is a "legal person" meaning it has rights and powers separate from the people who make it up. It has its own assets and incurs its own debts. The possible loss of any share holder is limited to their investment.

In each of the legal structures of a business a lawyer is required to draw up a set of papers. In the case of a Corporation a trade marked Name and more complicated paper work is also required. Costs for this kind of thing run from $300 - $800.

How Can You Finance Your Business?

Back...