Type of Businesses
Who Are You and What Are You About?
You’ve put a lot of thought into your business already if you have decided to move ahead and create something tremendous. We want to make sure that you get off to a really good start and know the direction you want to take.
What is Our Business?
When you establish your business, you may be planning every step and thinking everything through carefully, or you may jump in and start first because the opportunity is there and you want to act now, organizing as you go. If you are one of the “organizing as you go” set, you have to get strategic very quickly. You should also realize that some things will make your accountant more frustrated than others!
Getting organized and strategic quickly means that you are able to keep your focus on your business growth, rather than reacting to things around you and potentially missing out on some opportunities. In deciding what your business is, you will need to answer several questions. You also need to be able to describe your products and services very clearly; no one is going to buy from you if you cannot describe what it is that you sell. (Note that for ease of reading, we will refer to services that are offered as a product, rather than saying “products or services” over and over.)
Some people will be opposed to the thought of selling, but the truth is that if you do not sell your products, you will not be in business very long. If you do not feel that you are a strong salesperson, or you have never sold anything in the past, keep in mind that there are professional salespeople who can help you reach your goals.
The jurisdiction where you do business might use different terms to the ones we have below, but they will have similar terms and meanings.
Sole Proprietorship
An individual establishes and runs a business where they make all business decisions, and are responsible for providing a product or service(s).
Partnership (General)
Two or more people decide to work together and share the profits as well as the risks associated with running their company.
Partnership (Limited)
Two or more people decide to work together. Certain partners accept more risk than others.
Corporation
The owner of a business decides to create an entity that is separate from their own self. That business has the status of an entity. It can enter into contracts, pays tax, and files taxes separate from the people who own the business.
Joint Venture
Two or more people contribute goods, services, or monetary resources to a shared business enterprise. This is usually founded with a contract that all parties will sign. That contract will describe things like profit distribution, the management structure, and who is responsible to contribute what.
Franchise
An individual or a business may wish to establish and operate within parameters set by another company where the products, services, procedures, and more are all prescribed by the company.
Subsidiary
A company in one country can establish a presence in another country, provided they are following all the laws and rules in the new country.