![\"Factors](\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/01\/Factors-for-Selecting-Right-Business-Structure.png\")
<\/figure><\/div>\n\n\n\nLiability Threshold & Personal Risk <\/h3>\n\n\n\n
Owners would want to safeguard their risk under financial<\/strong>[1]<\/strong><\/a><\/sup> pressure. The right business structure could limit exposure to such risks. In the case of partnerships, the partner shares the responsibility to confront risk individually.<\/p>\n\n\n\n Meanwhile, the business models like LLP provide comprehensive protection to the owner\u2019s liability with a few exceptions. Furthermore, one can also opt for a One Person Company<\/strong><\/a> if he\/she wishes to mitigate the personal risk to a larger extend.<\/p>\n\n\n\n Do you\nwant the business structure that strikes the right balance between the risk and\nbenefits? Perhaps you need to do your math accordingly on account of business\ngoals and resources. Make sure that the structure is resilient enough to best\nalign with your needs or else you might alter it later that of course would\nconsume a lot of time and money. <\/p>\n\n\n\n A tax\nobligation for an LLP owner is more or less equal to the sole proprietor. The\nincome generated from the business is considered personal income and taxed\naccordingly.<\/p>\n\n\n\n As a small\nbusiness owner, you do not wish to confront double taxation in the early\nstages. The LLP structure prevents that mishap and allows the owner to reap\nmore income. Individuals in a partnership claim their respective profits as a\npersonal income. <\/p>\n\n\n\n A\ncorporation addresses their tax liability each year, paying taxes on profits\nafter deducting the expenses and payroll. If you pay yourself from the company,\nyou will be liable to pay personal taxes such as for medicare and social\nsecurity, on your personal return. <\/p>\n\n\n\n A sole\nproprietorship is one of the most widely used business models in India. Most\nstartups preferred to go with this business structure due to ease of formation\nand better control. All you need to register your name to get started with such\na business model. <\/p>\n\n\n\n You don\u2019t\neven need to pay separate taxes on the income earned from the business. But it\nhas some downsides as well. Sole proprietorship lacks the ability to procure fund\nunlike private or public limited companies. The investors and mainstream banks\nare likely to prefer public and private limited entity because of their limited\nexposure to risks. <\/p>\n\n\n\n In\nPartnership business models, each partner works on their respective set of\nresponsibilities and roles. Meanwhile, the corporations are under the\nobligation to share their internal affairs with state and central\ngovernment <\/p>\n\n\n\n If you wish to obtain funds from an outside entity, such as an investor, bank, or venture capitalist, you must opt for an authentic business model such as private limited company<\/strong><\/a>. Unlike sole proprietorships, Corporations don\u2019t necessarily encounter any complication while raising funds from an outside source.\u00a0<\/p>\n\n\n\n Also,\nbigger companies have the liberty to escalate funds by selling shares of stock;\nwhereas, sole proprietors can only raise funds via their personal accounts or\nby taking on partners. An LLP can encounter identical issues, although, as its\nown entity, it is not always required for the owner to utilize their personal\nassets or credit.<\/p>\n\n\n\nGoal and Resource Flexibility<\/strong><\/h3>\n\n\n\n
Tax Obligation<\/strong><\/strong><\/h3>\n\n\n\n
Business Models<\/strong><\/strong><\/h3>\n\n\n\n
Capital Investment<\/strong><\/strong><\/h3>\n\n\n\n
Control & Management<\/strong><\/strong><\/h3>\n\n\n\n