Everything Zibbet Only: Business Organization

In the US, there are three basic ways in which businesses can be organized: sole proprietorship, partnership and corporation. Additionally, there are several types of partnerships and corporations. Each form of business organization has it’s pros and cons, making one organizational option more appropriate than the others for a particular business. The basic distinctions between each form of organization have to do with how you deal with income taxes and how assets and liabilities are dealt with.

Sole proprietorships have one proprietor, or owner. The owner of the business has unlimited liability for the debts incurred by the business. Unlimited liability means that a sole proprietor’s personal assets may be seized to repay debts incurred by the business.

Partnerships are owned by two or more people, with each partner having unlimited liability for the debts incurred by the business. There are three types of partnerships: general partnerships, limited partnerships, and limited liability partnerships, also referred to as limited liability companies or LLCs.

Corporations have privileges and liabilities that are distinct from those of its members and are distinguished from sole proprietorships and partnerships by having limited liability for debts. This liability is usually limited to a fixed sum, most commonly the value of a person’s investment in a company.

When deciding to start a business, it’s important to carefully choose how your business will be legally organized and the costs and potential risks associated with each option. How is your business organized?

Best wishes for much success on Zibbet!

Vicki is committed to assisting her fellow Zibbeters improve their shops for successful online selling. She is the owner of five Zibbet shops: LOC Design Studio, Denim and Pearls, A Stitch and a Prayer, Black Creek Crossing and Think Like a Fish. You can follow Vicki on Twitter and through her LOC Design Studio blog.