Whether you’ve purchased an existing business or started one from scratch, you must decide which form of organization (sometimes referred to as “business entity”) is the best for your company. You can choose to set up a sole proprietorship, partnership, corporation or limited liability company, each has its advantages and disadvantages.
Remember, the form that you choose does not have to be permanent, If the circumstances of your business change, you can always change the form of your business.
Sole Proprietorship
The easiest and least expensive way to begin operating a business is as a sole proprietorship. There are no documents or forms needed to become a sole proprietor, unless the business will operate under a name other than the owner’s name.
Partnerships
There are basically two types of partnerships: general partnerships, which consists of general partners who share the management of the entity, and are personally responsible for the partnership’s obligations and each other’s actions; and limited partnerships, which consists of two classes of partners: general partners who run the business, and limited partners who are essentially investors.
Limited Liability Companies
A limited liability company (LLC) is a hybrid entity that combines the advantageous tax flow-through aspects of a partnership with the liability protection of a corporation or a limited partnership. What’s more, unlike a limited partner, a member of an LLC is not prohibited from getting involved in managing the business.
Limited Liability Partnerships
Limited liability partnerships are similar to limited liability companies in terms of the tax advantages, and a general partnership can usually be transformed into a LLP by filing a simple registration with state officials. Interest in this form of ownership is growing, and all states now permit LLPs, although a handful of states limit their availability to professionals, such as doctors or lawyers.
Corporations
One of the best-known and most widely used business entity forms is the corporation. For small businesses, the main advantages of a corporation is the liability protection it provides its owners or shareholders.
Liability is limited, because the corporation is a legal entity that is separate from its shareholder owners. It can buy and sell assets, take out loans, create contracts, hire employees and do many other things that a person can do. As a separate legal entity, the corporation has a perpetual life. Also, as a separate legal entity, the corporation is liable for its own debts and can be held liable only to the extent of the corporation’s assets.
Contact Us
If you have further inquires, please do not hesitate to contact Tannet at anytime, anywhere by simply visiting Tannet’s website english.tannet-group.com, or calling Hong Kong hotline at 852-27826888 or China hotline at 86-755-82143422, or emailing to tannet-solution@hotmail.com. You are also welcome to visit our office situated in 16/F, Taiyangdao Bldg 2020,Dongmen Rd South, Luohu , Shenzhen, China.
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