| Steps that you need to take on the way to set-up | | | | Advantage -- Unlike general partnership, owners do |
| your consulting business --- | | | | not have their personal assets at risk when the LLC |
| Choose your legal structure-- It is best to formalize | | | | is sued. Disadvantage -- There are stringent IRS rules |
| your business structure right from the beginning, both | | | | as to when you can be taxed as an LLC and to |
| for the legal and the tax considerations. | | | | become an LLC, you need to meet up with those |
| The basic business entity types -- | | | | rules in a different states. Limited Liability Partnership |
| - Sole Proprietorship | | | | (LLP) -- |
| - General Partnership | | | | Advantages -- |
| - Limited Partnership | | | | - There is a Limitation on the liability for a partners |
| - C Corporation | | | | which is the great plus point in it. |
| - S Corporation | | | | - There is a flexibility of capital structure and there is |
| - LLC (limited liability company) | | | | a flexibility in dealing out with the income and |
| A brief explanation of each business type --- | | | | expense to the owners too. |
| Sole Proprietorship -- Advantages -- | | | | Disadvantages -- |
| - For erecting a business operation, a sole | | | | - It can be pricey to produce it. |
| proprietorship is an effortless way for it. For a small | | | | - It can invite more legal issues as some LLP statutes |
| business owner, sole proprietorship is of very much | | | | are yet inexperienced in court regarding many |
| assistance. | | | | matters. |
| - In a sole proprietorship, your business is managed | | | | - There can be a difference in the requirements from |
| by you, all of the profits are surfaced to you and all | | | | state to state and besides this, Laws are too not as |
| the decisions are made by you. | | | | consistent as they are for a corporation. |
| - As a sole proprietor, you are less weighed down by | | | | Prepare your business plan -- Like any other business, |
| the government limits and besides this, you have less | | | | it is imperative that you organize your own business |
| to do in terms of reporting and taxes. | | | | plan. In the market, there are numerable books and |
| Disadvantages -- | | | | business plan software to assist you in preparing your |
| - If your business is charged, you and your personal | | | | business plan. |
| possessions can be at risk. | | | | - Once the plan is put into implementation, it gives a |
| - In elevating a capital, sole proprietorship may invite | | | | base for a comparison and for a measure |
| intricacy and than you may be required to use your | | | | achievements. |
| own money or personal loan for running the business. | | | | - It furnishes with the detail monthly projections for |
| - You might have to do an uphill struggle for getting | | | | the current plan year and gives a yearly synopsis for |
| an employee in view of the fact that sole | | | | the next two years. |
| proprietorships entail no stock shares | | | | - For executing a business ideas and strategy during |
| General Partnership -- A partnership is an alliance of | | | | the next 2-5 years period, Business Plan function as a |
| two or more people giving out their possession and | | | | guide for a businessman to propose a rational and |
| organizing their business. In order to evade a | | | | logical framework. |
| difference with regard to amount of time and | | | | - It provide foundation of co-operation with the |
| energy, each partner use to endow some money in | | | | representatives of third party financial institutions, |
| the business which is an innovative idea for creating a | | | | such as - creditors, government authorities, bankers |
| legally binding partnership agreement between all of | | | | and lenders aimed at obtaining loans and capital |
| the partners. Corporation - A corporation is created | | | | investment. |
| by selling shares to its owners. With the purpose of | | | | Create your home office -- If you are starting your |
| managing the company, these owners than opt for a | | | | business with a pea-nut amount of money, than |
| board of directors. | | | | begin by working from your home. This is utterly |
| Advantages - | | | | important if you are boarded on this business on a |
| - Since corporation is considered as a separate 'entity' | | | | part-time basis. If you are looking ahead to get |
| in almost all the cases, so it can be sued, taxed and | | | | together with the clients on a regular basis in your |
| can also go through a contractual agreements as well. | | | | home office, than better make sure of your |
| - A corporation does not necessarily put up the | | | | neighbors as they can criticize about the big number |
| shutters during the change of an ownership. | | | | of a traffic in your area. When you work at home, |
| - Through selling of a stock, Corporations can heave | | | | your home office fetches you with the many |
| money and it can also take away the cost of | | | | advantages. This embraces the chances of |
| benefits for its officers and employees as well. | | | | subtracting the mortgage interest, utilities, cleaning |
| Disadvantages -- | | | | and the upkeep. You will be also able to make use of |
| - It is an intricate administration. | | | | your internet connection, dining room table, home |
| - It requires an enormous amount for a formation. | | | | computer, telephone and the other facilities which are |
| - There is a double taxation for some owners. | | | | in a home. |
| - For any paid dividends, taxation is done at the | | | | Hence, these are the basic business consulting steps |
| corporate level as well at the personal level. | | | | which are needed to be considered. |
| Limited Liability Company (LLC) -- | | | | |