Starting or expanding a business can be an exhilarating journey, filled with highs and lows as well as many surprises along the way. However, business owners often become disheartened when the business stalls in slow growth, or when profits dwindle. While it’s natural to feel some anxiety when a business stalls or doesn’t pick up momentum, there are many things you can do to keep the momentum going. In order to continue to grow a business, there are a number of necessary steps you must take.
Strategic Management: One of the biggest obstacles faced by small businesses is the fact that most are run on a cash basis. Without an adequate cash flow strategy, companies are often used to operating on their “earn or lose” principle. Having a sound strategic management plan doesn’t separate the business from its owner, so the business owner is solely responsible and accountable for debts incurred by the company.
Limited Liability Company: Setting up a limited liability company (LLC) allows business owners to shield themselves from personal debts. The LLC is a separate legal entity from its owners are only liable for the corporation’s debts. Although limited liability companies are extremely effective, they are often difficult to set up, and many individuals find that they need a lawyer to help them set up an LLC. However, an attorney will be able to provide invaluable advice on whether an LLC is right for your business and, most importantly, how you can protect your personal assets should anything happen to the business while it is in operation.
Limited Liability Partnership: An LLC is combined with a corporation, creating a new entity called a LSP. Similar to a corporation, the main difference between a corporation and an LSP is that the corporation is treated as a public entity while a LSP is not. Unlike a corporation, an LLC cannot choose its own board of directors and cannot decide what its tax rate will be. As a result, all of the decisions made by an LLC are made by its board of directors.
There are two main differences between a corporation and a limited liability partnership, but there are also some similarities as well. One important difference is that corporations are required to pay taxes, while LLCs may not. A second main difference is that corporations have more freedom when it comes to borrowing money than a limited liability company does. An LLC is not legally considered a corporation until it begins to conduct business, at which point it is required to file reports with the IRS like all other businesses. Additionally, in most cases an LLC is only taxed once; by contrast, a corporation must pay corporate taxes both during its lifetime and immediately upon cessation.
These are just some of the differences between a corporation and an LLC. If you are seriously considering starting your own business, the tips and advice found in this main article should help you along the way. Hopefully, after reading this main article you feel more comfortable with the differences between a corporation and an LLC and understand just why one might be better suited for your needs than the other. Now that you know the difference between a corporation and an LLC, it’s time to choose the type of business that’s right for you!