The common business structure includes sole proprietorship, partnership, and companies. It’s important to note that these structures have different legal, and fiscal conditions and benefits, thus, it’s recommended that you consult professionals like attorneys or accountants before concluding about the structure. This is indeed more important if you aren’t setting up a sole proprietorship establishment or general partnership.
Sole proprietorship
The most common and simplest form of business is a sole proprietorship. It’s formed and possessed by one person. Numerous small businesses operating in the Gambia are sole proprietorships. An individual owner owns and manages the work and is responsible for all business opinions. The proprietor is also self-responsible for all the debts and arrears incurred by the business. The paperwork and setup formalities for a sole proprietorship are mainly lower than those of companies. This makes it fast and less expensive to start as a sole owner. For example, if the business cannot pay the funds owed to merchandisers, the proprietor can be sued personally. Sole proprietorships are generally registered under the name of the sole proprietor or use of a fictitious name with “trading as” or “doing business as”.
Advantages of the sole proprietorship
- One-person business, meaning a fast decision-making process.
- Easy to establish and limited paperwork conditions.
- All losses and profits are for the proprietor.
- Can swiftly acclimatize to change.
Disadvantages of the sole proprietorship
- Personal arrears: The sole owner isn’t a legal reality, and the proprietor can be held self-liable for the debts and scores of the work.
- Cannot quickly raise capital from other people which typically affects its growth capacities.
- Major man threat: Durability can be affected if the proprietor is sick or passed away.
The sole proprietorship business structure is simple and easy to set up. Still, like other business structures, you must gain applicable licenses and permits before operating to the public. For illustration, being a sole trader doesn’t mean you can start running an “academy” without the verification of the department of education.
General partnerships
A partnership is formed if two or more persons agree to work together. Working together as a partnership is a common-law right. This means that no specific state enactment is demanded to form a partnership. Still, all countries have bills dealing with partnerships. These bills substantially contain dereliction provisions that will apply only if the people haven’t addressed those issues in their partnership agreement. These bills give, for illustration, that unless there’s an agreement offering the opposite, all partners have equal rights to manage the partnership. They also partake the same in profits, losses, and income distributions. It’s also seen that each partner is considered an agent for the partnership and may bind the other partners in connection with the cooperation business.
Limited liability partnership
Another reality that may be chosen is the limited liability partnership or LLP. An LLP is a special kind of general partnership. The main difference between a limited liability partnership and an ordinary general partnership is in the partners’ exposure to liability. Partners in LLPs have limited, rather than unlimited liability. In most countries, partners in an LLP are shielded from liability for any of the partnership’s debts and scores. In some countries, still, the partners aren’t liable for debts arising from the negligence or unlawful acts of the other partners but remain liable for other debts and arrears.
Business corporations
A business corporation is the most complex form of business association. Its conformation and its internal operations are governed by state law. A business corporation is a reality organized for profit under the laws of one state. Non-profit corporations are formed under different sections of the law and aren’t covered by this publication. Although once the dominant form of a business association in the United States, in most countries now more LLCs are formed than corporations. Still, the corporation remains a popular and feasible option for numerous businessmen and women and is still the main choice for intimately traded businesses.
