Are you going solo in your business? Or do you need a partner? If you believe that more heads are better than one then you know for a fact that organizations thrive in numbers. Yes, there is power in numbers but going solo can work for some people too.
For startups, the most crucial decision to make is whether to push for a partnership or go solo. This is very important because deciding on the route you want to take is the first step towards cementing your success. You have to decide on the form of organization as this can dictate the next steps to your business.
Some CEOs would usually depend on an accountant for balancing their books. You have to take an expert’s or consultant’s advice when it comes to something that you’re not very adept with but you have to take the upper hand when it comes to making decisions for your company. Yes, the accountant’s skills and experience could be more expansive than yours, but you have to make an effort to know and understand your market and company as a whole before you delegate.
Here’s a guide on how to choose between these two business structures – sole proprietorship or partnership:
- Sole Proprietorship.This is the type of organizational structure wherein only one person owns and manages the business. This is the most basic type of organization which is inexpensive and has a simple structure. This is easy to put up and control especially for entrepreneurs that have limited capital. Most businesses operate in this category because it takes very little capital to fuel a business with this type. However, a solo proprietorship also has its risks and limitations because the company’s liabilities also become yours. Some couples would often make the mistake of registering their business as a solo proprietorship thinking that it’s conjugal but that should be categorized as a partnership. It would be wise to seek the recommendation of a legal and business consultant to know as to which category your business falls into.
- With partnerships, this is composed of two people wherein the income is equally divided between partners or depending on the role, effort, or investment put into the business. Professional practices can either be partnerships or corporations depending on the arrangement.
It is important to choose the right legal structure for your business to ensure that you are well on your path to success. It may be quite trivial but is a requirement for companies. Decisions must be made as it will create a forceful impact on your business which can also affect future outcomes. Needless to say, deciding on the business structure can make or break your business so this must not be taken lightly. You can also change or shift to a different type of business structure as you move forward and expand territories. Change is inevitable and you adapt your way to success starting with your choice of the appropriate business structure for your organization.