A decision must be made about the legal structure of the
business. That is, will it be a sole proprietorship, a partnership, or
On this page we have just given you the basic gist of each
type of legal structure. To understand each type of legal structure in
much more detail, you could go though “How to
incorporate?” It is complete guide on the different types of
legal structures and the legal procedure of starting up your company.
Sole Proprietorship: (business owned by one person)
- Ease of formation
- Sole ownership of profits
- Control and decision making vested in the hands of the
- Freedom from government control and taxation.
- Unlimited liability
- Unstable business life if the owner should die
- Less available capital in other types of business
- Relative difficulty in obtaining long-term financing
- Relatively limited viewpoint and experience of proprietor
Partnerships: (business owned by two or more persons)
- Ease of formation
- Direct rewards
- Growth and performance facilitated
- Relative freedom from government control and special
- Unlimited liability of at least one partner
- Unstable life of business (e.g. if one owner should die)
- Difficulty in obtaining large sums of capital
- Firm bound by the acts of one partner as agent
- Difficulty in disposing of partnership interest (e.g. if
one partner wanted to buy out the other partner)
Corporations: (a legal entity distinct from those parties or
individuals that own it)
- A shareholder or partner’s liability is limited
to a fixed investment amount
- Ownership is readily transferable
- Separate legal existence
- Ease in securing capital from many investors
- Ability of the corporation to draw on experience and skills
of more than one individual
- Activities are limited by the charter and various laws
- Extensive government regulations are required
- Less incentive for manager if he does not share profits
- Expense of forming a corporation is high
Considering the different advantages and disadvantages of the
various structures, you could choose a legal structure you would like
to go for.
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Table Of Contents
- How to start
a company? – Introduction
Is your new business idea “really” that brilliant?
How to make a “perfect” business plan? &
Why make one?
Business plan - Step 1 – Understanding your business!
- Step 2
– What do “you” want? (Personal
- Step 3
– How to form business objectives? & Why?
4 – How to make the “right” business
Making the right legal decisions
Making the right production decisions
Making the right hiring decisions
Making the right inventory decisions
Making the right marketing decisions
- Step 5
– Estimating the capital required
- Step 6
– How to “draft” the perfect business
How to raise the capital required for your business?