The World’s Most Common Company Types

Apr 24

The World’s Most Common Company Types

You always wanted to be an entrepreneur, but can’t seem to choose the appropriate form of business? Take your time and do some research. The organizational structure type will affect your own legal liability and company’s income tax treatment. The world is a global village today, but village elders might have their own different rules.  The legislation can vary from state to state, but there are many regions offering great trade and business potential to start or expand your enterprise. You will have to do your homework and assess the advantages and disadvantages of specific business organizations.

Keep it simple: The sole proprietorship

The most basic business form there is, referred to as a default company option.  It is not a legal entity, and it can be any size ranging from a kiosk to a factory. All it takes is a single person with a vision and means to conduct the business.  In the US the first step is to obtain the federal employer identification number from the IRS, and you can apply for it online.

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You don’t have to fill in a truckload of files, and you can sit on the throne as the only decision maker.  As a sole owner, however, you are also personally responsible for all taxes, debts, and losses.   You should thus think twice about running a high-risk business in the form of a sole proprietorship.

Keep it safe: Limited Liability Companies (LLCs)

LLC is the first preference for startups worldwide as it offers favorable tax treatment (no notorious double taxation) and limited personal liability. It also requires only a modest initial investment.  In France, there are many types of companies with limited liability with wide range of benefits. In Switzerland, numerous public limited companies and limited liability companies prosper.

You can also try your luck in other thriving markets like the Asian one, which has more than three billion consumers. In case you are wondering about the exact country you should target, Singapore typically represents a great way to start. First, of course, you should learn more about the very process of setting up a company in Singapore, but the fact is that the LLCs there are virtually identical to the UK’s Limited Companies.  You need to file the article of agreement with the proper state agency, pay the filing fee, and you are set to go.

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Go big with a corporation

In the US the most common company types are corporations and LLCs, with bulk of large companies like Microsoft organized as corporations. Traditional S Corporation is an incorporated business structure with legal entity. It can even acquire assets and property.

You can form a corporation by submitting the articles of incorporation and registering a business name. This takes more money and time than establishing some other forms of business.  Many also deem corporations to be more complicated to run due to corporate formalities and a pile of paperwork that likely to sit on your table all day long.

Consider your options

When deciding on business organization, you need to muse on the tax and legal issues, financial concerns, and your personal goals. Risk is the constant nuisance in business, but for the little peace of mind you might want to choose a legal structure that better protects your personal assets and is simpler to manage. Whatever you do, you should study the state’s legislative and requirements to establish a company. Only then embark on a journey to the financial ocean of opportunities. We gave you the compass, but you need to establish yourself as a proper captain.