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When building your digital business, many managers and executives overlook how they will structure their business. Every business, even someone running their operations from their own office, needs a structure to follow.
It defines the hierarchy and how things are carried out, who has the executive decisions and outlines many legal aspects of the company, such as how to comply. Not sure where to start?
Here are six of the typical business structures you need to be thinking about.
Sole Owner
If you’re running your business independently, you’re a sole owner, sometimes a sole proprietorship. This is the simplest form of business, the easiest to set up, and is a great way to get started.
A General Partnership
If two or more people legally own a business, sharing responsibilities within the business and the resulting profits, this is known as a general partnership.
LP (Limited Partnership)
A limited partnership is a partnership that operates a business comprised of two or more people. However, a general partner usually manages and oversees the business, whereas the limited partners tend to take a backseat.
This usually refers to the kind of partnership an investor or a shareholder may have, which is reflected in the responsibility of the business. The general shareholder can have an unlimited stake in the business regarding assets like debt. In contrast, the limited partner only has a limited responsibility, up to the amount they invest.
If you need assistance in setting up limited company in Ireland, then it can pay off to use a professional to ensure it’s done right and you minimize the risk of facing potential issues.
(LLC) Limited Liability Company
An LLC is a US-only business structure from a private limited company. It’s designed to protect all owners from personal responsibility regarding operations like managing debt. Instead, it is seen as a hybrid business that takes some aspects of a corporation and mixes them with those of a partnership or even a sole proprietorship. However, the rules and regulations of an LLC can vary from state to state, so you’ll need to research to see what opportunities you have in your area and if this is the structure you wish to follow.
Cooperative
A co-op is a business that its members operate, and instead of having a rank of upper management or ownership, the company members are on each. Each has a say in the company’s operational direction and a share of its profits.
These companies still have boards and managing directors to oversee business operations. Still, instead of owning the business, they run and are voted in by the rest of the company. The company aims to benefit all its members.
Not-for-profit Organization
This kind of business structure refers to a charity-type business, and as the name suggests, the company and its profits must be set up to support charitable causes and not to line an owner’s pockets. Some stringent rules and regulations must be followed to establish and run an NPO.
Summary
And there we have it, the seven common business structures that your digital business could be constructed of. If any resonate with you, be sure to carry out your research, see what opportunities, benefits, and drawbacks they could bring to your business ventures, and move forward in the most informed way possible.
Photo by Medienstürmer on Unsplash