Many people in Tennessee have an entrepreneurial spirit, and may wish to leave the rat-race behind and start up their own small business. While being a small business owner can be highly satisfying, it is important that those who wish to start a small business do their research and choose the business type that will best suit their needs.
What kind of business types are there? Well, there are three general business types with certain specific subsets. First, there are corporations. Corporations are business entities in which the owners are shareholders. Sometimes the owners serve as employees and receive a salary, but not always. A corporation is set up in a manner that makes it is a completely separate entity than those who own it.
Then there are businesses that are owned by multiple people. In this business type, the people who own the small business are not employed by the business. One example of such a business is a limited liability company. This type of business provides liability protections, not unlike a corporation, and is generally easy to set up. Partnerships are also a business type in which the business is owned by more than one person. In this business type, the partners are personally liable for the debts of the business and for the acts of the business.
Finally, there are single-owner businesses also known as sole proprietorships. This type of business only has one owner. The business’s profits and losses are reported when the owner files their personal taxes, because for legal and tax purposes, a sole proprietorship and its owner are one entity.
These are only a few examples of the types of small businesses a person could choose from. A person looking to start a small business may first want to discuss their plans with an attorney, who can explain their options, advise them on financial regulatory issues and other legal issues, and guide them through the process of legally setting up their chosen business entity.
Source: the balance, “Which Business Type is Best for My Company?” Jean Murray, Oct. 6, 2017