Business formation can prove to be quite a daunting task if the services of business registration agents are not sought.
According to the UK Registrar of Companies, there were approximately 233,770 business formations in the United Kingdom. The UK Government has made the business registration process less tedious by introducing electronic registration software. However, to avail this online facility, an entrepreneur can hire an authorized business registration agency.
Business Formation: Basic Forms of Business Organization
The following is a summary of some basic business formation types:
Limited Partnerships (LP) – An LP is formed by one or more general and limited partners. The general and limited partners co-own the business of profit. LPs can conduct any business, except:
Banking
Insurance
Trust company
The formation of LPs requires more formalities than general partnerships, but the formation requisites are minimal. In this business, the general partner’s personal liabilities extend to partnership debts and obligations, whereas a limited partner’s liabilities are restricted to his contributions to the partnership.
Limited Liability Companies (LLC) – These are a hybrid of a corporation and partnership. Such companies have to comply with the Memorandum and Articles of Association and Forms 10 and 12. There are several companies which opt to form limited liability business because:
They can circumvent taxation and avoid double taxation
Owners or members may be protected from debts and liabilities of the LLC.
There is hardly any paperwork, when compared to that in a corporation.
Joint Ventures (JV) – The joint venturers co-own a business enterprise and share the profits and losses. However, they are formed for single transaction and are limited in scope and duration. JVs are taxed by the federal and state authorities.
Corporations – This is the most popular business formation type, and is governed by the state of incorporation. Corporations are of three kinds:
General Corporation – Also called ‘C’ Corporation, this kind of corporation can have unlimited number of stockholders. Therefore, this type of corporation is formed by companies with more than 30 stockholders.
Close Corporation – This kind of business setup is appropriate for individuals setting up an enterprise alone or with a small number of people. Stockholders in close corporation cannot exceed 30.
Subchapter S Corporation – This kind of corporation is ideal for small business owners, who prefer being taxed like sole proprietors or partners.
To make your business formation procedure effortless and cost-effective, visit www.companyformations247.co.uk.
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