Structures

Companies can be owned by one individual, the Government, charitable organizations, or a group of shareholders. The type of ownership a company has will dictate what type of structure the company can have.

Sole Proprietorship

Sole proprietorships are owned by one person. You can employ as many people as you’d like, but there is still one owner. The owner keeps all profit after tax and overhead, but is personally responsible for corporate losses.

General Partnership

In a general partnership, all owners are equally responsible for the company’s legal and financial obligations. They jointly own all assets and share all profit as equals. There is unlimited liability for all partners involved, whereby personal assets may be forfeit.

Limited Partnership

In a limited partnership, the general partner assumes the most liability, while limited partners are liable up to their contributions to the company. The general partner takes on more risk for a greater share of the profit.

Corporation

A corporation is a legal entity that possesses the rights of a person. It is separate and distinct from its owners. Owners have limited liability where the shareholders can take part in the dividends and stock appreciation, while not being personally responsible for the company’s financial losses.

S Corporation

A business entity with fewer than 100 shareholders that allows tax-free status like in a partnership but with incorporation. Shareholders pay at personal tax rates for their share of the profit instead of the much higher corporate rate.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: