The choice of the legal form of business determines the entrepreneur’s goals. There are four organizational forms of doing business in the United States.
- Sole Proprietorship.
- Partnership.
- Corporation.
- Limited Liability Company.
- Each form has its own advantages and disadvantages, so we will tell you a little about each.
Sole Proprietorship
The simplest form of business from a management point of view. The entrepreneur pays taxes as an individual – from the company’s income.
But there are also disadvantages. There are bureaucratic difficulties with hiring a large number of employees. And banks are not too willing to give loans for the development of an SP.
And the main disadvantage is the unlimited financial liability of the businessman. This means that if the court collects a fine from the company or obliges it to compensate for the client’s losses, then the company’s shortfall will be covered by the entrepreneur’s personal property.
This form is convenient for sole IT specialists, but is poorly suited for full-fledged companies.
Partnership
An equal partnership of several company founders. There are two types of such partnerships: general and limited liability.
General is similar to SP, and in it, entrepreneurs bear full financial responsibility. In limited, liability is only within the limits of the company’s contributions and capital.
Partnership is an excellent form of organizing an IT company for equal specialists.
