What Type of Business Structure Makes Sense For Entrepreneurs?

Many people in business today are seeking to maximize their profits and financial security. In order to do so, they must invest in their company. The word "invest" has a broader meaning than just buying or selling something. In business, investing means risking money to attain a higher return on investment. Investing can take many forms, including using financial instruments such as stocks and bonds, real estate property, franchises, insurance companies, partnerships, and private equity.


A corporation is any company that seeks to maximize its profits by capitalizing on opportunities. Corporations are a wide-range concept, but typically these profit Seeking businesses include providing some form of tangible product or service to consumers that they need or desire. A few businesses that are very popular and/or have become very profitable are Apple Computers, Microsoft Corporation, Wal-Mart Stores, Enron, and AT&T. Many other businesses exist that fall into this category and are also seeking to maximize their profits.

Limited liability companies are another way for businesses to increase their profits. An LLC is operated by one person, the owner. Unlike corporations, LLCs are not able to create or carry out any of their own strategies. They are basically a vehicle for the owners to carry out their personal investments and debts. In most cases, owners of LLCs are regarded as private individuals.

Private equity allows a corporation or business to tap another corporation or business for capital, resources, and profits without needing to make a profit out of the investment. This may be done when the corporation or business needs money to expand or use their profits in ways that would not be feasible without the partner's funds. Examples of this would be buying additional real estate, purchasing raw land for development, or investing in oil and gas. The partnership would then own the property, while the investors would be the ones making the profits off the deal. Private equity firms can be used for a wide range of ventures, but they tend to be more successful with industries where there is plenty of property to develop or where there is already a ready market for the type of venture being executed.

Forming a corporation requires that you have shares of stock ownership in a publicly traded corporation. A corporation is able to issue shares to its shareholders, while a limited company is limited to the amount of shares that it can issue and the number of shares that can be issued at any given time. Both types of corporations have the same basic operating procedures, but a corporation has advantages over a limited company in terms of flexibility. This means that it is possible to expand a corporation into a publicly traded entity, in which case the name of the corporation would simply change to reflect the name of the publicly traded company.

A limited liability company is formed in a similar fashion to a corporation, except that instead of shareholders meeting in formal session to decide what they want to do with the corporation, limited liability companies are owned by the individuals who own them. Limited liability companies are more popular with start-up businesses because unlike corporations, they do not have to have a board of directors. It is possible for an owner to step away from the business and hand it over to a new partner, however, so there is still a Board of Directors to report on the company's activities.

Unlike a corporation, a limited company does not have any property or assets to protect, so debts are easy to come across. However, if the company does make profits, then some of those profits can be reinvested in the company to increase the value of the shareholder. A limited company also requires less legal protection than a corporation, since the only real legal risk associated with a company limited by shares is that the shareholders will have all of their assets taxed to them. Limited liability companies are also easier to register in most countries than corporations, so international expansion is generally easier for these kinds of companies.


There are many different types of business structure for entrepreneurs to consider when establishing their own company. However, the limited liability company is probably one of the most popular ones. Many people choose to use a limited liability company when they start their own business, for many reasons.