Dorado Management helps to simplify the structure of a business. The whole process can seem daunting, especially when doing it the first time.
However, they have an entire team dedicated to helping make this a much smoother transition.
The first step is knowing about all the different structures of a business.
From there, people can make smart decisions on what they need to do to keep everything running smoothly.
A. Sole Proprietorship
For a low-cost, easy-to-set-up business, a sole proprietorship is the way to go. This means that one person is in charge of the company’s profits and debts.
Most of the early expenses will be related to state and federal fees and taxes. Depending on the business, there will also be equipment needs and office space. This is recommended for small business owners. Think about writers, bookkeepers, tutors, etc.
There’s always a chance to scale up, as there are successful companies that started as sole proprietorships. Walmart, in the very beginning, was a sole proprietorship. There’s always an opportunity to change later on if necessary.
A partnership, as the name implies, involves at least two individuals. There are general partnerships with equal shares and limited partnerships where one partner has control of the operation while everyone else merely contributes and receives a portion of the profit.
These are relatively easy to form, and they carry the status of a sole proprietorship or a limited liability partnership. Having that flexibility comes in handy for a lot of business owners.
There’s more growth potential with a partnership, especially when looking at early business loans. Since bankers now have the option of considering two different credit lines instead of one, it helps offset any credit score issues a single person might have.
A partnership does cost more than a sole proprietorship, and some of the cost goes towards an attorney. It makes sense as a business mind to work with an attorney to hash out a partnership agreement. Companies like Dorado Management Services can handle a lot of the paperwork if it’s a new concept.
C. Limited Liability Company
Small and large businesses can choose to go the LLC route. It’s a bit of a hybrid as far as structure is concerned, allowing owners, partners, and even shareholders to put a limit on their personal liabilities while getting the benefits of a partnership business.
When limited liability companies first came to be, it was meant to provide liability protection that used to only be available for corporations.
It also focused on allowing earnings and losses to go to the owners’ income with personal taxes. There’s a state filing fee with an LLC, but it’s relatively simple and affordable to start a company like this, and companies like Dorado Management Services can help.
A co-op company is owned by the people that it serves.
There are lower taxes with a cooperative and plenty of federal grants to increase funding quickly.
This type of structure benefits the company members, as they will vote on the mission and direction while sharing profits.
It’s a bit rare compared to some of the other business types, but well-known companies like Land O Lakes, Welches, and REI all work under this concept.
By law, corporations are entirely separate from their owners. The corporation has its own rights, meaning that it can go through lawsuits, own property, create stocks, etc.
A corporation is broken up into several different common types of corporations, as they all do something a bit different.
Common types of organizations that go the corporate route include C corporations, S corporations, B corporations, Closed corporations, Open corporations, and Non-Profit corporations.
People are familiar with C corporations, as they can have an unlimited number of investors. Apple and Amazon are two huge companies that went this route. Many of the top banks and financial institutions in the United States also filed as C corporations.
Going the corporate route is that there is limited liability for all stockholders. It’s also much easier to create ways to raise capital since there are multiple investors in a business like this. Most businesses that have already found success in some capacity will evolve into a corporation.
They do not have to set everything up this way initially, but the evolution eventually happens for most companies once they reach a certain level of success.
F. Figuring Out Your Business Structure
Touching on the main business structures is just the tip of the iceberg for many people. There’s still so much work that needs to be handled to get it up and running.
That’s why both first-time business owners and seasoned veterans rely on companies like Dorado Management Services.
One of the best things about Dorado Management Services is that they can assist in the initial business structure if a person wants. It might not seem like a huge deal to make this decision initially, but it could help dictate early success.
Being able to customize solutions and help out in unique circumstances makes a big difference for business owners. The benefit of having a company that has so much experience in the business world helps out tremendously. To learn more about what Dorado Management Services offers, visit their website online.