When planning to start your own business venture, the crucial things to understand are business plan, business strategy and business structure. Though the idea of starting a business is always exciting yet there are many challenges the person or the team has to go through. If one has never ventured in the corporate market then, starting in business can be scary. However, beginning is always the tough but as the time grows, things starts smoothening.
Once you have laid down the business plan then business structure comes into existence. The road to successful business has to cross the challenges developed by business structure. There are various structures to choose from but one has to be clear about which can suit him the best.
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Be a Sole Trader:
Starting In business, being a sole trader is by far the easiest way. The formalities involved are simple to handle of which one is to inform HMRC. The business owner has to keep records to calculate profits annually. It is based on the mode of tax. The profits and debts generated in the business are only yours. Also, the business owner is liable to pay off debts down to their last worldly possession.
Start business in a Partnership:
Partnership is a group of two or many people to showcase their talents and contacts. To build a successful business venture, people join each other to do their bits. However, when in a partnership, the profits and debts are shared among all the members. The ratio is decided by the members prior to starting any venture. For instance, they can be equal partners or unequal partners. It is always recommended to lay down a legal contract that includes the work of all the partners. Other formalities like tax paying are same as in case of sole trader.
Start a Limited Company:
The business becomes a separate entity from the owners when labeled Limited Company. The business can trade, incur liabilities and own assets. The business owner is the one who owns the maximum share in the company. All the profits and debts generated are the business’s property as a whole. The personal liability of every member in a limited company is limited to the share capital which they have invested. This type of business structure requires very efficient tax planning since profits, salary and dividends are considered together.
Start a Limited Liability Partnership:
This type of business structure is similar to any normal company. However, the taxation aspect is handled as in case of partnership. The business owners have restricted liability, administrative and statutory obligations as in case of Limited Company but not the taxation flexibility. It is suitable for medium and large ventures.
Start a Co-operative:
Any co-operative is a mutual organizationowned by the employees. However, this type of business structure needs specialist advice.
These are some of the business structures prominent in the business arena. The decisions have to be taken with careful though on each and every aspect of the structure.