If you own a business, you need a lot of professionals to help you along. In some cases, that includes accountants or marketing experts. In other cases, it involves people who understand business process outsourcing. However, almost all business owners need a great business attorney on their side. Just started your business? Interested in growing it and have legal questions? Wondering what a business attorney does? In this blog, I plan to answer all those questions. I hope that you enjoy reading these posts and that they help you. Thank you for reading! My name is Brenda, and I started a small business when I was just 17. Over the years, I have worked with many pros, but my business attorney has helped me the most.
There are a number of different forms of ownership available to people wishing to form an organisation. However, the options can be confusing, and many forms of ownership have minute differences. Below is a summarisation of each form of ownership available.
Sole Proprietorship
A sole proprietorship in essence can be considered an extension of the owner. In the eyes of the law, a sole proprietorship is considered the personal property of the owner. This means that owner is directly responsible for all financial and legal matters within the company. It is similar in practice to how an individual might buy a property and rent it out.
While considered the personal property of the owner, the owner is under no obligation to name his business as the same name as him/her, and would still have to filed and registered with the corresponding jurisdictions.
General Partnerships
A general partnership is defined by the law as a 'voluntary association.' There is, in general, no limit to the number of partners, and the minimum requirement is two parties who wish to engage into a partnership. A general partnership is similar to a solo proprietorship in that each partner is responsible for the profits and losses of the company. A general partnership does not need to have an express written agreement, only requiring an intention of voluntary association. Typically a partner in this form of ownership is not entitled to a salary or wages unless it is expressly agreed upon beforehand.
Limited Partnership
A limited partnership works, in principle, to bridge the gap between a corporation and a general partnership. In a limited partnership, investors can invest money with 'limited liability'. This means that investors only stand to risk what they have actually put into the partnership. This 'limited liability' is conditional upon whether the partner takes an active role in the management of the business. If the partner does do so, then they will be considered a general partner.
Corporation
The main difference between a sole proprietorship/partnership and a corporation is that a corporation is treated as a separate entity to the owners. Forming an organization as a corporation provides a wide range of benefits; property becomes easier to hold as a corporation will continue to exist in the eyes of the law even if an owner or partner dies. A corporation can also conduct much of its business such as legal actions and purchasing property and assets, in the company's name.
A big reason why people choose to start a corporation over other forms of organisation is that it provides limited liability to shareholders and investors. This allows people to invest into the business and limits the risk to the investment that they made.
Typically, corporations are categorised into two different forms;
Closed Corporation
Closed corporations are corporations that are not publicly traded on the stock market. Investors typically have a more vested interest in the business, and the chance to buy the corporation's stock is generally invitation only.
Public Corporation
A public corporation is publically traded on the relevant stock market. Typically, anyone can invest into this form of business provided they have enough money to buy said shares.
To learn more about the various types of business organisation, reach out to a lawyer in your area.
Share10 August 2019
