Business Structure

Business structure or business organizational structure or business legal structure is one of the first aspect of starting a successful business. Below are the main types of business structures. Each business structure has advantages and disadvantages. The business structure you choose depends on the type of business you are in, your products and services, the size of your business, and many other factors. The best business structure for one type of business does not necessarily mean it is the best for another. For example, the best business structure for a mortgage broker business is not the same as the best business structure for a daycare business.

Different business structures

Below are basic types of business structures valid in all states. 

Sole Proprietorships

This is a very common type of business control structure or business legal structure. It is the easiest to start up but also the riskiest.

Partnerships

When two or more partners join force to start a business together, they form a business joint venture. This form of business control structure is a partnership. Each partner is personally liable and a partnership agreement is needed.

Limited Liability Companies (LLC)

This is a newer and more popular form of business structure. The LLC has many benefits including limited personal liability for business losses. The LLC also offers pass through taxation similar to the S corporation business structure.

Corporations

Forming a corporation is by far the most complicated way to go about doing a business. The corporation business structure is also the most demanding. In the past, even small businesses formed corporations because of the separate legal entity from the owners. However, nowadays, the LLC business structure often does good enough job for small successful businesses.