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Operating and Controlling Your Business

Now that you have your business type established, how should you operate it?  Various entities have different requirements.  Below is a brief explanation.

SOLE PROPRIETORSHIP

  • Controlled by one person
  • All liability rests on the owner

PARTNERSHIP — GENERAL

  • General partners have equal management rights and control, if not otherwise specified in a partnership agreement
  • Responsibilities and control can be defined in a written partnership agreement

PARTNERSHIP — LIMITED

  • Management and control of the business handled by the general partners
  • Partners’ liabilities limited to their investment

 CORPORATION — C AND S

  • Bylaws (operating rules) created to establish and explain the rules governing the organization
  • Shareholders have sole authority to approve articles of incorporation, mergers and dissolution of the company and elect the directors
  • Directors are responsible for major decisions, including selection of company officers
  • Employees, including owners, must be paid reasonable compensation
  • Hold annual meetings

 LIMITED LIABILITY COMPANY (LLC)

  • Single-owner LLCs operate like sole proprietorships
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