Business is very important as it helps people earn money. It is not possible for one person to run a business by himself. Therefore it is essential that a group of people work together in order to earn a living. The success of any business depends upon how well it has been planned, how strictly it is followed and how dedicated is the group working towards the business. There are various ways to start a business such as selling products. However, most businesses require some sort of capital in order to start and operate.
Any kind of business can be categorized as either personal or corporate. A corporate business structure is one in which all the liability of the business activity is carried by its corporate body, which is usually a separate legal entity from the shareholders. On the other hand, a personal business structure involves only the liability of the owner, together with certain limited rights to buy, sell, and transfer shares among other persons. Corporate and personal businesses differ in terms of their scale, resources and complexity. Although the two differ in some aspects, both have their own advantages and disadvantages.
In personal liability businesses, the money of the owner is transferred directly from his personal assets to the business structure. This allows the owner to use the money in any way he deems appropriate. Most people working in this type of business structure to raise money by lending it to others. If the loan amount raised is less than the value of the personal assets, then the owners have the option to foreclose the assets and regain the money they owe to their creditors. However, this must be done according to the law in the particular state where the business exists.
Business enterprises can either be sole proprietorships or corporations. Some businesses are sole proprietors, while others are corporations. Under the former, only the owner can work on the business and no one else can work for him. The sole purpose of the corporation is to separate the owner from the responsibilities and liabilities of the business itself. Many companies use the two different types of business structures as a means to raise money.
Under the sole proprietorship, all the decisions of the business belong to the owner alone. He makes all the important decisions such as the choice of partners and capital investment. He can also choose the mode of operation of the business. Under the corporation’s system, the owner and partners share equal shares in the ownership of the corporation. This enables them to have access to the profit made in the corporation after the expenses of their business have been taken out.
There are some disadvantages to raising money through personal liability. First, businesses must have the proper permission from the federal government before doing so. Second, even if you are a sole proprietor, you cannot operate beyond the confines of your house. You will not be able to start a business anywhere other than your house, which can be a disadvantage especially for small businesses that need to have supplies and materials delivered to their warehouses regularly. Lastly, although businesses can be incorporated in states other than Washington, it is still better to have a business corporation in Washington.