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TYPES OF BUSINESSES, Advantages - Coggle Diagram
TYPES OF BUSINESSES
Limited Liability
A Limited Liability Company is a business structure allowed by state statute. Each state may use different regulations, you should check with your state if you are interested in starting a Limited Liability Company. Owners of an LLC are called members. Most states do not restrict ownership, so members may include individuals, corporations, other LLCs and foreign entities. There is no maximum number of members. Most states also permit “single-member” LLCs, those having only one owner.
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because the company is independent of its owners, it can be sold or passed on
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Disavantages
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accounts are more complicated, meaning that you’ll likely need an accountant
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Sole propertiorship
Definition: A sole proprietorship is a non-registered, unincorporated business run solely by one individual proprietor with no distinction between the business and the owner. The owner of a sole proprietorship is entitled to all profits but is also responsible for the business’s debts, losses, and liabilities.
Maintenance: A sole proprietorship is easier to start and maintain than a registered business. With minimal legal costs and no ongoing state requirements, you can simply run your business. This is the case even if you’re using a fictitious name, also called a DBA (doing business as).
Control: The sole proprietor has complete control and decision-making power over the business. Without any partners, you are the sole owner of the business, and can therefore run it as you choose.
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Disadvantage:
Liability: One of the major disadvantages of a sole proprietorship is that you will be personally liable for all obligations of the business. There is no separation between the assets of the owner and the assets of the business.
Non profit
Starting a nonprofit offers several benefits. They include the ability to solicit funds from people who want their donations to be tax-exempt, apply for grants and keep from having to spend valuable donations on corporate taxes. However, there are some drawbacks. Nonprofits must maintain their tax-exempt status continually by undergoing IRS financial scrutiny, looping profits back into the organization, conducting board meetings and keeping detailed records.
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Do I have the financial resources to start a nonprofit? Starting a nonprofit costs between $2,500 and $5,000. These costs go into legal, registration and business startup costs.
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Franchise
Definition: A franchise is a type of license that grants a franchisee access to a franchisor's proprietary business knowledge, processes, and trademarks, thus allowing the franchisee to sell a product or service under the franchisor's business name. In exchange for acquiring a franchise, the franchisee usually pays the franchisor an initial start-up fee and annual licensing fees.
A franchise is a joint venture between a franchisor and a franchisee. The franchisor is the original business. It sells the right to use its name and idea.
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