The Success Of Your Business Starts With Knowledge on Setting Up A Company 

Learn basic information pertaining to various business structures to helps your business succeed

by Mike Gray Tuesday, April 26, 2011
(Dover, DE)– Statistics reveal that 9 out 10 businesses fail each year. Nevertheless, census data show that approximately 65% of new businesses were still operating four years after they started. The fact is, setting up a company takes a fair amount of money, effort and knowledge. Unfortunately, employer firms usually manage successful businesses while sole proprietorship are not even included in the study.

To help new business owners learn the proper way of setting up a successful company, consider the following tips:

It is important to spend a significant amount of time researching before setting up a company. Note that one common reason why businesses fail is the increased costs of building one and the stiff competition. It is important for a business owner to study both potential and existing competitors as well as factors that increases overall business costs and check if you have sufficient funds to get your business started. If you are already operating a business, you can still conduct research and integrate the results into your business plans.

In addition, business owners need to eliminate or at the very least, reduce any existing debts and clear credit reports before you plan on setting up a company. A study conducted in 1998 reveals that difficulty in obtaining financing and excessive debts where the leading cause of business failures. Usually, a company requires at least $50,000 in capital to start up a successful business. Of course, this does not mean your company will fail for not obtaining this amount but if you do not have it, you need to make sure your credit allows you to borrow loans from various lending institution. If you have excessive debts or you have poor credit history, you will have a difficult time obtaining funds.

It is not a good idea to start a sole proprietorship or general partnership. It is essential to choose a separate legal entity like a limited liability company (LLC) or corporation to operate business. The risks associated with starting a business, particularly for independent business owners, are extremely high enough. It is not in your best interest to increase the risks further by putting all your personal assets, including your home and automobiles, on the line.

It is important to know that the government provides many benefits for properly structured businesses and if you are unable to choose the right business entity for your company, there is a real risk of failing and not maximizing the tax and legal advantages of certain business structures.
The right business structure involve in one or several entities, such as an LLC managed by a corporation. If you are a serious business owner who plans on setting up a company for long-term success, it is important to immerse yourself with information pertaining to various business structures, their advantages and disadvantages and learning which can offer more benefits for your particular case. This will help you save thousands of dollars in fees, unnecessary losses, paperwork, legal and tax liability.

The author is a researcher and writer for http://settingupacompany.org, an online-based information source that assist entrepreneurs on the correct way of setting up their respective companies.

0    submitted by Mike Gray
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