Choosing which state to locate a new business is an important decision. Each state has unique laws that control how business works in the state, understanding these laws and regulations can help you make the right choice. One aspect of business governed by business law in Missouri is how you can organize a business in the state. For small businesses, incorporating may not be a sound option. If that is the case, a general partnership or sole proprietorship are the options available.
Pros and Cons of Sole Proprietorships
Under business law in Missouri, a sole proprietorship is a business owned by a single person or jointly owned by a husband and wife. This is by far the easiest type of business to form. The other big advantage of this sort of organization is that the owner is free to operate the business however he or she chooses - there are no partners or shareholders to interfere. However, sole proprietorships carry with them personal liability for the owner. This means that any debts or obligations that affect the business can also affect the business owner's personal assets.
Pros and Cons of Partnerships
A partnership is another type of business organization offered under business law in Missouri. A partnership is a type of business that is owned by two or more people. A predefined agreement by the partners determines the balance of power between partners. There are three subtypes of partnerships to consider:
General Partnerships are the most common type. Missouri uses the Uniform Partnership Law, which is a standard law in many states. The partners in a general partnership share both profits and liability, depending on their proportionate interest in the business.
General partnerships can become registered limited liability partnerships - the effect of this change is to modify the liability of the partners. While registered limited liability partnerships lost some usefulness due to recent changes, they are still the best choice for certain businesses.
Limited Partnerships
Another type of partnership is the limited partnership. This sort of partnership offers liability protection some of the partners in the business. These businesses feature at least one general partner who is responsible for running the business. Additional partners, known as limited partners, have limited liability in the business but are still able to reap the profits and tax benefits. However, limited partners must be careful not to become too involved in the business, for they risk being considered a general partner and thus subject to liability.
