Choosing a Structure for Your Pet Care Business - Series - Part 1

Whether you are just starting out in the pet care business or you have been in business for some time, it’s a good idea to be familiar with the options for how you can structure your business. We’ll take a look at the common business structures, their advantages and disadvantages, and how to form them in a series of posts.

First you need to have an idea of the various options. The most common options are:

• Sole Proprietorship
• Partnership
• Limited Liability Company (LLC)
• Corporation

Sole Proprietorship and Partnerships

Many new businesses start out as a sole proprietorship. This is a one-person business that is not registered with the state. You just start running your business and that’s it. Under the law, the owner and the business are treated as one person. This means the owner reports business income on her personal return. It also means that the owner is personally liable for business-related debts.

A partnership is a similar structure, but has two or more owners versus one. You and your partners simply start up the business. A share of the business income is reported on each partner’s individual income tax return. Each partner is liable for debts of the business.

These structures are a good choice for small service-oriented businesses that don’t have much risk of being sued, don’t have a physical place of business and don’t borrow much money. For example, they might make sense for a dog walker or two pet sitters working together.

Next up: An Overview of LLCs and Corporations

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Comments

[Fred Norris]

Do you have to file any paperwork to form a general partnership with a friend?

[Laurie Kadair Redman]

Fred,

The answer depends on what state you live in. In Louisiana, the answer is yes. You can find the forms you need at http://www.sec.state.la.us/comm/corp/corp-filings.htm

Thanks for your comment.

Laurie