There is a whole lot of difference between sole proprietorship, partnership and companies. These differences are determined by the vision behind each business project and the ultimate objectives as well as the structure of the entity.
These factors among others prescribed by the law determine the differences and distinctions between each type of business structure.
- Sole proprietorship: This is otherwise known as a one-man business, because the owner makes the business a one-man show. Legally speaking, there is no distinction between the owner and his business and they are both fused into one and the same entity. Suing the business means suing the owner and vice-versa.
- Partnership: Partnership is the kind of business relationship that exists between two or more people who have equal stakes in a business and look forward to an acceptable profit-sharing ratio. The law does not really consider a partnership business separate from its joint owners; the law considers the business an economic relationship between its owners.
Partnerships can be formed by word of mouth between consenting members and they can also decide to make it formal by drawing up an agreement. A partnership can be naturally dissolved when the agreed number of years earmarked for operation expires or when a key member of the partnership dies. It can also dissolved through bankruptcy or some court order.
It must be noted that businesses are not just conducted in a void or without any responsibilities to the government and the people you claim to serve by being in business. Your business must be fair to employees, pay government taxes, obtain permits and licenses, and meet up with other required obligations to all. You mustn’t forget that your business must also obtain the necessary insurance coverage so as to provide the right protection for all. While it is not required that you know every letter or application of the law books, you are expected to understand and adhere to legal requirements that pertain to your kind of business.
Still talking about insurance, it is important to know that vehicles and equipment and even employees should be insured against unforeseen eventualities. Company assets can be insured against fire and theft, and staffs can be insured for medical needs and accidents at work.
Wherever you are in doubt, it is best you see a qualified business lawyer/attorney or some chartered accountants to help out. You cannot claim ignorance of the law where you are capable of hiring people who could guide you and help you put things right. You expertise at handling things will show you forth as a savvy and perhaps successful entrepreneur.