Question

would you prefer a sole proprietor, a partnership, or a corporation to start your company? Do you think your decision would change based on the type of company you plan to start (i.e. what industry?)

Answer 1

While initiating the new business, I would prefer to go for the partnership firm.

However, there are a number of partnership firms but I would prefer to initiate the business with the limited liability partnership.

The main feature of this kind of partnership is that the members are not completely liable for the outcomes of the business. It means that in case of losses, the liability of the partners will not cover the personal properties The liabilities to the business will be paid by the partnership firm’s assets only. Apart from this, this kind of business organization also facilitates a number of tax benefits. In the comparison of corporations, LLP have better control over the day-to-day operations of the organization

The various advantages of this form of the structure are as below:-

The liability of partners is limited only up to the partnership ratio

These organizations are easily operated and managed

The management of these organization has relatively greater flexibility than corporations

This kind of organization is a separate entity than the partners

As far as changing the type of business form on the basis of industry, I would be open to change the selected form of the business depending on the industry by following the below-mentioned considerations:-

Type of incentives provided to the various forms of business

The chances of attracting investment from other organizations

Liability on the business

The chances of losses

The level of control or flexibility in the decision making or operation is required in that particular industry

Statutory requirements for different types of business forms.