There are several types of limited liability business, each with their own unique set of pros and cons. A sole proprietor can be established quickly and easily by applying to the state and obtaining a certificate of authority from the state. A limited liability company can also be established quickly but requires additional paperwork and filing for a fictitious name.
The newest form of business enterprises in operation in the U.S. are the sole proprietor, general partnership, limited partnership (LP), and limited liability company (Ltd). Each of these forms has pros and cons in cost, complexity, annual reporting requirements, compliance, and tax liability. The sole proprietors is the simplest form of business enterprise to open and operate as it does not require any formal financial documents, registration, or annual reports.
The main benefits of the sole proprietors’ business are the lack of investment requirements and registration fees. The major disadvantage is that the owner must have personal assets to secure the limited liability status. The limited liability status also limits the legal capacity of the owner to recover damages resulting from his negligence or intentional acts of others against the owner’s assets.
General partnerships and limited liability companies, or LLCs, are popular among lawyers, accountants, venture capitalists, and corporate attorneys. Both types of business allow an individual to engage in a limited form of business with limited liability. LLCs are limited by state law to the ownership and assets of a specific individual. The individual can then use those assets for his own benefit or for the benefit of his partnership without paying tax or having to be personally liable.
Limited liability companies, or LPs, are similar to corporations but only owners are allowed to benefit from profits. Because of the limited amount of funds available to the corporation, LLCs typically have less profit than corporations. LPs, however, tend to have more flexibility and are more difficult to start up, manage, and operate. Limited liability companies (LLCs) provide greater flexibility and protection for the owner and for the business.
If you are considering beginning a business, it is important to understand the nature of the business you wish to operate. to begin with and what type of operation it will have. The type of operation also affects your personal liability, which is an important consideration when choosing your personal assets. When choosing a form of business, it is also important to consider your personal liability and the liability of your employees. It is important to choose the most appropriate and economical method for your particular business needs.