Question

(Business Structures) If you were to set up a small business in Hobart upon completing your current degree, what type of business structure might you decide to set up and why?

Answer 1

The first and foremost thing is, One of the decisions that a business owner has to make is what type of organizational structure their business is going to use.As we know that there are four types of business structures in the U.S. Each structure has different tax, income and liability implications for businesses owners and their companies. These are as:-

1.Sole proprietorship.

2. Partnership

3.Llimited liability and

4. Corporation.

After completing degree , now i am going to set up my small business in the Hobart city, the first thing which i would consider is the strategy to be choosen among the business strategies available. I would chooose that strategy that is going to be profitable for me in the long run. First of all , i have to consider, what sort of business i would start. i have to keep in mind the tastes and preferences of the consumer regarding the products which i am going to produce in my firm. I have to maximise the growth rate of the firm, so that the production will increase.

As we know sole proprietorship is the most common business strategy available. In sole proprietorship the owner have the complete control over company operations. Businesses that typically form sole proprietorships are home-based businesses, shop or retail businesses and one-person consulting firms. As its name signifies partership is formed when two or more people join, or partner, together to run a business. Each partner has equal share in the net profits and losses of their business. Like a sole proprietor, each partner reports their income on their personal tax return and pays self-employment taxes to the IRS. One of the newest organizational structures for businesses is limited liability company (LLC). The limited liability structure is considered a hybrid as limited liability companies can be formed as corporations or partnerships. LLCs can provide owners, who are commonly referred to members under this structure, the protection from liability and other obligations similar to a corporation. Limited liability companies can also be set up and managed like partnerships. The most complex organizational structure for businesses is the corporation. This type of business structure separates the liabilities and obligations incurred by company operations from being the responsibility of the owners. Corporations are regulated by the laws of the state they are set up in. Unlike sole proprietor and partnership businesses, corporations are taxed as separate entities at corporate tax rates. The IRS taxes corporation owners at individual tax rates.

For a newly degree holder sole proprietorship is one of the best option of business structure. The person has the full control over the business operations. The person need not to share the profits of the firm with the other partners.