Company Incorporation

Corporations are more complicated than either proprietorships or partnerships. They are usually more expensive to form and have more complicated tax and legal requirements. However, they also shield their owners from personal liability for the business’s debts and losses. Some people find the protection a corporation provides against officers, directors, shareholders, and employees is worth the complicated organisational and tax requirements. This business structure is usually best for businesses that have many employees and can afford to hire experts on legal and tax matters to help the business. Also, businesses that intend to grow rapidly may not want to be a sole proprietorship or partnership since these structures can prevent the startup from attracting investors who will not want to expose their personal assets to the business’s financial liabilities.
Partnerships are forms of business owned and operated by two or more persons. There are two basic types of partnerships – general partnerships and limited partnerships. In a general partnership, all partners are personally liable, both for any debts the partnership is unable to pay and for any contracts that the partners enter into for the business’s benefit. In contrast, the liability of a limited partner is limited to the amount of capital that partner invests in the business.
When you start your own business, deciding which type of business structure to use is one of the most important decisions you will make. Not only will this decision have an impact on how much you pay in taxes, but it will affect the amount of paperwork your business is required to do, the personal liability you face, and your ability to raise money. Following are descriptions of the most common business structures.