There are three types of business legal entities in which to choose from when beginning your business. The first type is Sole proprietorship made up of one business owner carrying personal liability. This means the owner can be sued and lose personal assets like home or car. This structure is easy to set up, decisions are not held up, and all profits go to the owner but may require long work hours, self motivation, and business financing expertise. The second type is Partnership which consist of two or more owners. This structure has unlimited liability, holding each partner responsible for paying debts or judgements even if against other partners. Corporation is the last structure and it is considered to be a legal person by itself. It carries limited liability using only the assets of the company to pay company debts. It has rights and responsibilities under the law and can buy and sell property.
In managing risk, things to be considered are obtaining patents for products, copyrighting your work, and insuring your business. There are many types of insurance you can purchase depending on your need and deductibles should be a deciding factor for it is the amount of loss you agree to pay before the insurance company pays anything on the claim. Other things you should do are protect computer and data by using power surges that protect from lightning, install virus protection software, and use backup hard drives to protect from computer crashes. Have a disaster recovery plan for major catastrophes like fires, tornados, and floods; and make sure you have all required permits, licenses, and certifications that are needed for your business.
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