Sole proprietorship – One person operating a business as an individual is a sole
proprietorship. The sole proprietorship is the most common form of business
organization. Profits are taxed as income to the owner personally. This rate
is usually lower than the corporate tax rates would be. The owner has complete
control of the business but faces unlimited liability for its debts. Since this
is a fairly simple type of legal structure, there is very little government
regulation and reporting. A sole proprietorship applies for a business permit
at the county clerk’s office in the county in which the business is located. A
sole proprietorship is easier to set up and maintain.
General Partnership – A partnership exists when two or more persons join together in
the operation and management of a business venture. Partnerships, like sole
proprietorships, are subject to relatively little regulation and are fairly easy
to establish. A formal partnership agreement is recommended in order to address
potential conflicts before they arise. Under a partnership, each partner is
liable for all debts of the business. All profits are taxed as income to the
partners based on their percentage of ownership. A general partnership
registers a business name with the county clerk’s office in which the business
is located.
Limited Partnership – A limited partnership is established by an agreement between
two or more individuals. In a limited, however, there are two types of
partners. A general partner has greater control in some aspects of the
partnership; for instance, only a general partner can decide to dissolve the
partnership. Limited partners can only receive a shore of profits based on the
prorated amount on their investment and the liability is similarly limited to
proportion of their investment.
Your Business Plan
You should always have a plan of what
you will be doing with your web design business, and how much you plan to make
in your first year. Writing a business plan gives you a sense of direction,
clarity and focus. When you are writing a plan, you are forcing yourself to
brainstorm, thus getting innovative ideas about how your business will succeed.
Keep in mind that your business plan can always be altered, as it is not set in
stone.
A good business plan will have a mission
statement. It should outline the overall purpose of your web design business. In
addition, your business plan should include a Unique Selling Proposition (USP):
a summary of what makes your web design business different from others and
valuable to your target market. When creating a Unique Selling Proposition,
analyze some of your competition, and think about your target audience and how
you can make your business unique.
Finally, create a budget for your
business. Think about how much you plan to spend in your first year.
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