Essay about Starting a Business

Submitted By royce776
Words: 5753
Pages: 24

It is vitally important to start — and keep — a business on solid legal footing, so make finding qualified legal and accounting professional help a top priority. Since legal requirements are subject to change, you should contact the appropriate local, state and federal departments for the latest information.
→ What Type of Business Is Best for You
As you begin planning, first determine the legal form of business that is best for your situation- The Forms are:
Sole Proprietorship
Partnership
Corporation ("C" or "S")
Limited Liability Company (LLC)
Your decision is based on issues of liability exposure, taxes, the number of owners involved and future expansion plans. It is advisable to consult an attorney, CPA or financial consultant for help in deciding which legal form of business best suits your situation.
Sole Proprietorship:
The sole proprietorship is the most popular type of business organization in the United States and is the easiest to form and operate. An individual starts the business in his or her own name and it does not require any specific legal organization beyond the normal requirements such as licenses or permits. Personal and business activities are not distinguished. For tax purposes, the profits or losses of the sole proprietorship are combined with the personal income of the business owner.
Advantages of a sole proprietorship include: less formality and fewer legal restrictions, all profits go directly to the owner, flexibility and easier decision-making with one owner.
One of the main disadvantages is the owner is personally responsible for business debts, extending to the owner's personal assets such as houses, cars, etc. Other disadvantages include difficulty in obtaining financing and high tax rates if the business is successful.
Partnership:
A partnership is a relationship between two or more people who join to carry on a trade or business. Each person contributes money, property, labor or skill and expects to share in the profits and losses of the business. A formal, written partnership agreement is strongly recommended, but not required. There are two legal Forms of partnerships: general and limited. In a general partnership, the owners work together to manage and finance a business, sharing in the business's debts and profits. A limited partnership consists of one or more general partners who manage the business and are personally liable for debts and one or more limited partners who invest in the business in anticipation of a share in its profits. The limited partners do not manage the business and are not liable for the debts of the partnership beyond the amount invested.
Corporations:
A corporation is the most expensive and complex form of legal structure for a business, but also provides more legal protection for the owners. A corporation is a separate entity which exists under the authority of the state and approval by the Secretary of State. You must contact the Georgia Secretary of State, Corporations Division, to register your business as a corporation.
You can find information and filing forms on the Secretary of State's Web site at www.georgiacorporations.org, or call at 404-656-2817.
A corporation is generally more expensive to operate than a sole proprietorship or partnership and is more regulated by government, but it also limits stockholders' liability and provides more stability.
The Secretary of State Corporations Division will explain the basic steps for setting up a corporation, which include:
Reserve the corporate name.
You will receive written notice and have 90 days to complete the incorporation.
File the articles of incorporation.
Complete the transmittal form.
Send articles, transmittal and check to the Secretary of State's office.
Publish intent to incorporate in the county's official paper; call for current fee.
Hold organizational meeting.
Adopt by-laws.
Elect directors.
Elect officers.
Issue stock.
There are a number of "corporate kits" containing pre-printed by-laws,…