| Every business requires a structure that will | | | | Typically a General Partner will manage the |
| withstand necessary legal and governmental | | | | business, and the Limited Partners provide the |
| scrutiny. The choice of how to organize a new | | | | pool of money required in funding a business. |
| enterprise should be made based on the needs | | | | Usually units of a Limited Partnership are sold in |
| and capacity of the owner(s) to maintain and | | | | equal dollar amounts. Be sure and read the deal |
| detail the records, history and finances of the | | | | prospectus carefully and skeptically. In addition, be |
| business.Many simple service businesses are set | | | | sure to familiarize yourself with the laws of the |
| up as a sole proprietorship. The lawn service I | | | | state where the business entity will be domiciled |
| utilize is a sole proprietorship. I make out the | | | | as the various states have different laws in this |
| check in the name of the person providing the | | | | area.A Limited Liability Corporation is a relatively |
| service. If I do not spend over $600 per year | | | | new corporate structure that offers many of the |
| with any sole proprietor I am not required to fill | | | | advantages of the corporation and the benefits of |
| out tax form 1099 and provide the information to | | | | individual tax rates. An attorney will be able to |
| the Internal Revenue Service and the service | | | | advise if the Limited Liability Corporation is |
| provider.The sole proprietor is the method of | | | | appropriate for your particular needs. |
| structuring most entrepreneurs utilize when | | | | A Corporation is the vehicle that requires the |
| starting out in a small-scale commercial venture. | | | | most care and maintenance, as well as providing |
| This works if services provided are simple, of | | | | maximum personal protection. A Corporation is |
| relatively small transaction size, small inventory | | | | ostensibly a legal entity that acts as if it were a |
| required and there is no need for hiring and paying | | | | person. Losses are incurred by the legal entity of |
| employees. As sales grow and the need to | | | | the Corporation, not by the shareholders of the |
| expand becomes apparent the entrepreneur will | | | | Corporation. Assets of an incorporated business |
| probably want to consider a more formidable | | | | are property of the Corporation, not the individual |
| structure.Here is my advice when considering the | | | | shareholders. The owners of stock in the |
| business structure best suited for your business, | | | | Corporation enjoy benefits based on the number |
| based on present and future needs: consult an | | | | and status of their shares.An attorney can advise |
| attorney. Taxes, investment vehicles, partnering, | | | | the best state in which to incorporate based on |
| harvesting profits, incorporation options, and | | | | your anticipated needs. Nevada is the best state |
| depreciation or only a few of the areas of | | | | for secrecy. Delaware is excellent for |
| concern a new business may need to consider | | | | transparency and resolution of disputes. Some |
| and decide upon. A business attorney will have | | | | states are more business friendly from a tax and |
| expertise in every area of concern and can | | | | regulation standpoint and all of these areas must |
| construct the most appropriate structure for your | | | | be considered before filing for incorporation.A |
| business and personal needs. The ability to | | | | Corporation will need to be assigned a Federal |
| memorialize in precise legal documents the exact | | | | Identification Number in order to open a bank |
| terms, conditions, and responsibilities of all officers | | | | account at any financial institution in the United |
| and/or share holders in the company is invaluable | | | | States. The Federal Government utilizes this |
| when disagreements occur.The importance of | | | | number when tracking tax, financial and |
| written agreements and contracts, signed by all | | | | employment data on every incorporated |
| parties to the transaction, cannot be overstated. | | | | business.The Articles of Incorporation, annual |
| No one ever enters into a business situation if | | | | meeting minutes, a board of directors, corporate |
| they are 100% sure it will fail. There is always an | | | | fees and filings, state compliance and filing local, |
| air of confident expectation that the business has | | | | state and federal tax returns require a detailed, |
| a good chance of success and will ultimately | | | | and potentially costly execution of corporate |
| prosper. Unfortunately, there is always a | | | | governance. In addition, stock certificates must be |
| significant chance that results will be disappointing | | | | appropriately accounted for and capitalization |
| and disagreements will occur. Make sure that all | | | | requirements met and maintained.Be realistic when |
| parties to a deal have a full awareness of the | | | | choosing the business structure that will offer |
| business structure they are participating in.Oral | | | | your fledgling enterprise the most useful features |
| contracts and agreements have been upheld in | | | | based on present and future needs. Many people |
| courts. However, they are much more difficult to | | | | file for incorporation, then realize they do not |
| enforce than properly written and executed | | | | need the hassle of maintaining detailed books and |
| business structures. Do not leave important details | | | | records. Use the business structure that enables |
| to chance. Have proper documentation on hand | | | | you to legally perform every obligation required, |
| for the protection of all parties.Partnerships, limited | | | | while allowing you to be a slave to your business |
| partnerships, limited liability corporations, and | | | | opportunity, not a slave to your corporate |
| corporations are popular vehicles for housing the | | | | structure.Geoff Ficke has been a serial |
| legal structure of a business. Each has benefits | | | | entrepreneur for almost 50 years. As a small boy, |
| and liabilities, depending on the needs and | | | | earning his spending money doing odd jobs in the |
| requirements of the business owner(s).A | | | | neighborhood, he learned the value of selling |
| partnership can be useful when several parties | | | | himself, offering service and value for |
| bring complimentary assets to a venture. One | | | | money.After putting himself through the |
| partner might have a patent that represents a | | | | University of Kentucky (B.A. Broadcast Journalism, |
| commercial opportunity. Another might have | | | | 1969) and serving in the United States Marine |
| investment resources they can bring to bear. Yet | | | | Corp, Mr. Ficke commenced a career in the |
| another potential partner has specific | | | | cosmetic industry. After rising to National Sales |
| management experience to contribute.I have | | | | Manager for Vidal Sassoon Hair Care at age 28, |
| entered into several partnerships in the past with | | | | he then launched a number of ventures, including |
| mixed results. If there is a bit of advice I can | | | | Rubigo Cosmetics, Parfums Pierre Wulff Paris, Le |
| offer to potential partners before they start it is | | | | Bain Couture and Fashion Fragrance.Mr. Ficke and |
| this: have full agreement on how to harvest profit | | | | his consulting firm, Duquesa Marketing, Inc. ( has |
| loss when success/failure occurs. One partner | | | | assisted businesses large and small, domestic and |
| wants to grow and mature a business, while | | | | international, entrepreneurs, inventors and |
| another wishes to cash out after a few years | | | | students in new product development, capital |
| and this is where the seeds of destruction are | | | | formation, licensing, marketing, sales and business |
| sown. Goals, as well as duties and responsibilities | | | | plans and successful implementation of his |
| must be fully transparent.The Limited Partnership | | | | customized strategies. He is a Senior Fellow at the |
| can be an excellent opportunity for the | | | | Page Center for Entrepreneurial Studies, Business |
| entrepreneur wishing to put capital to work, but | | | | School, Miami University, Oxford, Ohio. |
| not physically committing to work on a project. | | | | |