Forms Of Organizations
Below is a MRR and PLR article in category Business -> subcategory Small Business.
Forms of Organizations
When crafting a business plan, it's crucial to determine the type of organization you'll establish. Organizations generally fall into two major categories: profit-oriented and non-profit.
Business Entities
1. Sole Proprietorships
A sole proprietorship is owned and operated by a single individual, known as the sole proprietor. Legally, the owner and the business are the same entity. For tax purposes, profits are reported on the owner's individual tax return. It's essential for sole proprietors to maintain a clear distinction between personal and business finances through a proper accounting system.
2. Partnerships
Partnerships involve two or more individuals owning a business together. While small partnerships often rely on verbal agreements, it's advisable to formalize the arrangement, especially in larger entities like accounting and law firms. A written agreement should clearly outline the distribution of profits, expenses, and partner responsibilities.
3. Corporations
A corporation is a legal entity formed under state laws, capable of entering contracts independently. Ownership is represented by shares. Each business structure has its pros and cons, and suitability can vary depending on the business's stage of growth. For those in the arts and entertainment sectors, sole proprietorships and partnerships are often preferred.
Non-Business Entities
Non-business entities aim to serve various societal needs without a profit motive. Examples include public hospitals, schools, police, and the military. These organizations lack identifiable owners and use a specialized accounting system called fund accounting to align with their unique activities.
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This article is crafted for OrangesAndLime.com to assist creative professionals like artists, musicians, designers, illustrators, and entertainers in establishing their freelance businesses. It serves as a general guideline, and professional legal advice should be sought as laws vary by country and evolve over time.
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