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One of the first and most delicate questions which anyone starting a business must ask himself is: which is the best form of ownership for me to use? Each of the several legal forms of business ownership has its peculiarities and, because of this, the future of an undertaking may very well depend on the appropriateness of the form selected for carrying out. The legal forms are as follows:
1. Sole Proprietorship. A form of business ownership organized and managed by only one person. It is possible that the capital in this form of business comes from the collective contribution of members of the family or among friends. However, for the business to be considered a sole proprietorship, it should be registered in the name of only one person.
2. Partnership. A business organization where two or more persons contribute money, property, or talent to carry on a business. A partnership acquires judicial personality upon the agreement of the partners. Such agreement required to be in writing. In the case of limited partnership, where the organization is composed of a limited and general partner, a limited partner has limited liability for business debts, while general partners have unlimited liability.
3. Corporation. This is an artificial aspect being created by the operation of law, having the rights of succession and the powers, attributes, and properties expressly authorized by law or incident to its existence. Some of the well known digital printing companies in town are the perfect example of a corporation. In running a huge printing house requires huge amount of capital for the printing machines alone if the company aims to deliver high quality print postcards for instance. More so, more capital is needed when they decide to expand or create branches in different countries, because they need to set up new machines, new offices, and of course new employees.
After you have known these forms of ownership, the questions dont stop there. If you have picked the type of ownership you want to venture in, some of the vital questions you need to ask yourself are: How difficult is it to organize the business and what formalities are necessary? What is the estimated cost to meet the legal requirements including legal fees, taxes and filling cost? How can you get an additional capital? How easy can you transfer the ownership? Will it be possible for the owners to participate actively in the management of the business? How easy it is to change from one form of ownership to another after the business has been organized?
Those are just some of the key questions you need to consider after you have chosen your preferred type of ownership for you to be guarded from future problems that may arise in your business as you go along.
