Three Legal Business Structures That Can Exist in a Professional Practice

Before starting any business venture, the first hurdle that one must resolve is choosing what type of business structure one would wish to use. Typically, the type of structure one chooses influences several elements of the business, such as the amount and form of income tax one has to file, the day-to-day operations, and many other things. Selecting the right type of business structure is beneficial as it gives one the right balance of protection and benefits. The three major categories of business structures include sole proprietorship, partnerships, and corporations. Hire our assignment writing services in case your assignment is devastating you.

The first one, sole proprietorship, is operated and owned by a single individual, a sole proprietor. The one individual makes all the decisions concerning the business, and the enterprise has no other legal entity different from that of the owner. More so, the business owner is single-handedly liable for all debts (unlimited liability) and does not share profits with any other person. Lastly, the scale of operations a sole proprietor conducts is usually small, and no legal formalities are needed to begin. A partnership involves two or more people operating conjointly, unlike a sole proprietorship. Partnerships are categorized into limited liabilities and general partnerships (Austin & Wetle, 2012). For the latter (general partnership), two or more partners are responsible for managing the enterprise and are equally liable for the business’s debts. As co-owners, partners also have an equal share of losses and profits. Limited partners, on the other hand, act as both limited and general partners. Whereas general partners operate and own the business while being liable, limited partners usually serve as mere investors without any business decision rights.

Lastly, corporations are business entities that operate separately from their owners. Corporations are treated as independent legal units (Austin & Wetle, 2012). They offer investors the best security from personal liability and responsibility. Unlike proprietorships and general partnerships, corporations operate on a broad scale and need comprehensive reporting and recordkeeping. They are also needed to comply with more extensive tax requirements and regulations.

References

Austin, A., Wetle, V. (2012). The United States health care system: Combining business, health, and delivery. Pearson.

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