Deciding on the best Home Business Setup for your home-based business is a vital part of your startup. When you work from home, it seems very easy to ignore the legalities of real business. But, make no mistake about it, choosing the correct business structure is an absolute necessity. There are basically 3 different types of home business structure that you need to know. They are Sole-Proprietorship, Partnership, and Corporation. For most home based business and others who work from home, the most popular model is Sole-Proprietorship, but each has its own advantages.
Sole-Proprietorship is among the easiest home business setup business model to do. You can do it right online in a matter of minutes. You can apply for your Federal EIN number right on line also. As a Sole-Proprietor you have the final say so as to how your business is run. Even though this is the easiest, and most popular, business model, it does have some considerations. With this model, you are legally help responsible for your business. For instance, if your work from home business gets sued, then they can also levy your personal property, along with the business property. You have no shelter from liability.
Partnership – With this model, you are saying that your business is run by 2 or more persons. The only real difference from a Partnership and a Sole-Proprietorship is the number of people who own the business. And with this home business setup, all owners are legally liable.
Corporation – the third model is as a corporation. This is by far the most difficult and costly business model to setup. Not only is it more difficult and costly, it is federally regulated. But, it does come with some perks. For instance, if a customer experiences a loss as a result of your business and sues your business, then it is the business, not you personally, who is liable.
Just starting out, most home based business chose Sole-Proprietorship. No matter which one you choose, make sure you choose wisely.