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There are basically 3 types
of business entities (business structures).
1. Sole Proprietorship
2. Corporation
3. Partnership
Sole Proprietorship
A sole proprietorship is owned and operated by
one person - you. And many entrepreneurs choose
this form of entity when starting their first
business or a new business as well.
If the business grows then you can always
up-grade your status to a partnership or a
corporation. |
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| Yet in the mean time, starting a business as a
sole proprietorship continues to be the easiest,
fastest and least expensive way to start an
internet home business.
However, a sole proprietorship may have its
disadvantages as well.
For example, when you form and run your business
as a sole proprietorship you become solely
responsible and liable for the business itself. |
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However, you should also know that the chances
of anything going wrong with an internet
business that sells brand new products are slim
to none.
Legal problems are never heard of when it comes
to selling brand new products online. And if a
problem should arise then most likely it will be
with the product and not with your business.
And if there is a problem with the product then
the customer can simply return the product back
to you in exchange for their money, credit or a
replacement product as well. |
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If there are technical
problems involved, such as in the case with
computer hardware and software products then the
customer must contact and deal directly with the
manufacturers’ technical support staff to
resolve the matter. (Computer product
manufacturers handle all technical support for
their products).
However, if liability remains a concern then you
may want to set up your business as a
corporation, partnership or a limited liability
company.
But if it’s just you by yourself, and you’re
selling brand new products online, then a sole
proprietorship may be the best way for you to
start your business from home.
A sole proprietorship is the simplest business
structure for anyone to form and can easily be
done by registering your business name as a DBA
(doing business as) with your state government
or county clerks’ office. |
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Corporation
Although forming a corporation may seem a little
more complicated than starting a sole
proprietorship, there may still be some
advantages in this type of business entity.
For example, in a corporation, the corporation
itself becomes a separate entity from the
individual owner of the business. And liability
now falls upon the corporation instead of the
owner.
Furthermore, the process of forming a
corporation is not that difficult as some may
suggest. And you’ll be glad to know that you
don’t have to pay an attorney to form your
corporation. You can do it yourself for free.
All you have to do is fill out the articles
(forms) of incorporation and send it in to the
Department of Corporations for your state with
the appropriate filing fees which differ from
state to state.
And if at any time you become confused on how to
fill out the articles (forms), then you can
always refer to your states’ government website
as every state website provides complete
step-by-step instructions on filling out your
corporation articles. |
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Partnerships
A partnership is a legal
business structure where two or more people
share ownership, duties and responsibilities for
the business. And a partnership is
usually formed when additional start-up funds
are required or expertise is needed.
Each individual partner
should have some type of knowledge or skill that
he or she may bring to the business in order to
add value to the partnership and bring greater
success to the business as well. And it is very important
to carefully select who you choose as a partner
and agree to go into a partnership with seeing
that the success of the business will depend
upon all partners involved in one form or
another.
Partners within the
business should also be able to work well and
get along together without any major conflicts
in order for the business to function and run
smoothly. And if partners are
carefully selected and agreements are made
clear, then everything should go well. |
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Forming a partnership can become a little more
complex as well. Furthermore, there are
different types of partnerships such as general
partnerships and limited partnerships.
Yet in either case, a
contract and agreement must be made and
notarized in order to be recognized as a legally
binding contract. And any and all agreements
must be made clear and worded carefully in order
to avoid any conflict or legal complications.
Yet starting an internet
business does not have to be that complicated.
And it’s something that anyone can do.
However, the easiest,
fastest and least expensive way to start an
online store business is to form your business
as a sole proprietorship. And if the day comes when
employees or partners are needed, then you can
always re-structure and upgrade your business to
a corporation or a partnership as well. But for now, starting your
business as a sole proprietorship may be the
best way to go. |
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Next-> |
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| >
Sole Proprietorships Explained |
| >
Corporations Explained |
| >
Partnerships Explained |
| >
Limited Liability Companies Explained |
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