A lot of factors are considered while deciding what kind of legal structure your business is going

to establish. The income tax bracket your business will come under and the amount of return it

gets also depends on the kind of business entity you register your firm as. The widely used types

of structures used are:

1) Sole- proprietorship

It is the simplest form of business structure. most start-ups use this kind of

structure, and one person is responsible for the entire planning and

implementation of the business strategy. He/She is the sole owner of the

business and brings in all the capital. Makes conducting the business easy

and decision making fast (Dungan 2017). Gives the owner the freedom

because less regulations apply.

2) Partnership

This type of business is formed when two or more individuals join

resources to form a venture. This team up can be very beneficial especially

if the individuals involved complement each other’s skills. There are a lot

of tax incentives as well and the owners share losses, liabilities and equity

which lowers risk for everyone (Suzdalova 2017), but it also introduces

risks of disagreements and slows the process of decision making as

everyone must be on one page before something is finalized.

 3) Corporation

Another type of business structure we studied about is to file our business

as a separate entity. This means that the business is recognized by the state

and ownership of the business can be transferred via buying and selling of

stocks. This gives the owners protection against any personal risks if a

litigation occurs against the corporation. It gives a more formal approach

to conducting the business and paves the way for expanding the business

globally in the future or enlist the company as public (IPO). The legal

structure is very strict for this kind of firm and requires hiring of expert

business planners. Gives tax benefits as well under some state laws but

can be double taxed as well (like C-corps). Expensive to file and maintain.

They can save themselves from double taxation by filing as an S-

corporation but only U.S citizens can do that (Maffini 2019).

What business structure suits my venture?

After listing all the different types of legal business structures and their advantages and

disadvantages, I think the best way to establish my business venture is to opt for sole

proprietorship as this business idea was hatched in my brain alone. My personal disposition

towards having a freedom of choice and control over the inception of my ideas is what leads me

to this decision.
The main traits of an entrepreneur include high degree of commitment and tolerance (Lee 2019),

I find those traits present in myself and hold strong value for the sense of accomplishment

derived from working through hardships. Although sole proprietorship makes me liable for any

losses incurred during the operation, but I will not be accountable to anyone. It will be a

challenge to raise enough capital, but it will be the best opportunity for me to learn the market

trends and business tactics to ensure more success in the future.

References

Dungan, A., 2017. Sole Proprietorship Returns, Tax Year 2015. Statistics of Income. SOI

Bulletin, 37(2), pp.2-28.

Suzdalova, M.A., Lizunkov, V.G., Malushko, E., Sytina, N. and Medvedev, V., 2017. Innovative

Forms of Partnership in Development and Implementation of University-Business

Cooperation. The European Proceedings of Social & Behavioural Sciences (EpSBS). Vol. 19:

Lifelong Wellbeing in the World (WELLSO 2016).—Nicosia, 2017., 192016, pp.450-455.

Maffini, G., Xing, J. and Devereux, M.P., 2019. The impact of investment incentives: evidence

from UK corporation tax returns. American Economic Journal: Economic Policy, 11(3), pp.361-

89.

Lee, B., 2019. Human capital and labor: the effect of entrepreneur characteristics on venture

success. International Journal of Entrepreneurial Behavior & Research.