Before launching your small business, it is important to know the best legal structure. Legal structure refers to the way a business is organised. Picking the best legal structure for your business is critical. That’s because it affects aspects of your business ranging from tax payments to your personal financial liability. The most common types of business legal structure are sole proprietorship, partnerships, and corporations.
Sole proprietorship or a business owned by one person is the most common and simplest legal structure. The owner and the business are the same entity in terms of taxation. The owner is also financially responsible for business and their personal assets will be used to cover losses or debts incurred by the business.
The sole proprietorship is the second type. This type of business structure is very similar to the sole proprietorship- all partners are held financially responsible for the debts of the business and the tax burden is borne proportionally by the partners.
The third and the most complex business structure, and the most difficult to obtain, is the corporation. In a corporation, the owners and investors are separate from the business in terms of taxation and income and are not held entirely liable for the company’s debt.
If you want to know what the best legal structure for your business is, check out this article from Business News Daily: http://www.businessnewsdaily.com/8163-choose-legal-business-structure.html