Where is your business going and what kind of legal form allows for the growth you envision? Contact your business plan to review your goals and see which structure best fits those goals. Your business should support the opportunity for growth and change, not hold it back from its potential. There is no need to go into the details of legal forms and ownership here, but a brief overview will help you appreciate the diversity of companies. At the broadest level, a distinction can be made between privately owned and managed organizations, those owned and operated by the State and those managed by voluntary organizations. Here, we will first look at different types of private companies. This entity is owned by two or more persons. There are two types: a partnership, where everyone is divided equally; and a limited partnership, where a single partner has control of its operation, while the other person (or persons) contributes to the profits and receives a portion of them. Partnerships have a dual status of sole proprietorship or limited liability company (LLP), depending on the financing and liability structure of the company. There can be many different variations of the partnership theme, depending on the activity of your partners. You may have general partners who are involved in the management, financing and liability of the business, or you may have limited partners who do not play an active role in the management of the business, but whose liability is limited to their investment. More information about limited partnerships will be discussed later in Business Builder.

Nor do partnerships necessarily have to be divided equally. It is perfectly legitimate for a partner to have a majority stake. A connection between two or more people in profit-seeking businesses. Partnerships can be created with little formality, but since more than one person is involved, a partnership agreement should be established. A partnership agreement establishes the company`s terms by formalizing rules relating to profit and loss sharing, ownership shares, dissolution conditions, and management rights, among other things. A corporation is a separate legal entity organized in accordance with state and federal laws. The property is divided into shares. Business activity is governed by a charter that defines the powers and limits of each company. Companies that operate in more than one state must comply with federal interstate trade laws and state laws, which can vary widely.

A type of business entity owned and managed by a person – there is no legal distinction between the owner and the business. Sole proprietorships are the most common form of legal structure for small businesses. One of the first decisions you need to make when starting a business is determining the right legal structure for your business. Although small businesses can be LLCs, some large companies choose this legal structure. An example of LLC is Anheuser-Busch Companies, one of the leading companies in the U.S. brewing industry. Anheuser-Busch, headquartered in St. Petersburg. Louis, Missouri, is a wholly owned subsidiary of Anheuser-Busch InBev, a multinational brewing company based in Leuven, Belgium. Incorporation: Corporations are more complex entities to create, have more legal and accounting requirements, and are more complex to operate than sole proprietorships, partnerships, or LLCs.

One of the main disadvantages of a company is the high level of governance and oversight by the board of directors. Often, this prolongs decision-making when multiple shareholders or investors are involved. Although not required by law, a partnership agreement, also known as a partnership agreement, is often created to describe each partner`s contribution to the business. These articles determine the roles of the partners in the business relationship, whether financial, material or managerial. Below are a few you may want to include in your “articles written about partnerships” to protect the best interests of your partnership. An example of this type of business is Google. In 1995, co-founders Larry Page and Sergey Brin created a small search engine and made it the world`s first search engine. The co-founders first met at Stanford University during their Ph.D. and then set off to develop a beta version of their search engine. Soon after, they raised $1 million from investors and Google received thousands of visitors a day.

With a combined 16% stake in Google, they get a total net worth of nearly $46 billion. Liability: LLC members are protected from personal liability for debts and business claims, a feature known as “limited liability.” If a limited liability company owes money or faces a lawsuit, only the assets of the company itself are threatened.