By citizen.com 

When it comes to setting up the legal structure of a new small business, there is no one-size-fits-all solution. As the founder of the business, you will be considering one of three legal forms — sole proprietorship, partnership or corporation — depending on answers to questions such as these.

First, will I be the only owner? If so, you may choose to remain in a sole proprietorship. Easy to form, this structure allows the owner to make all the decisions and receive all the profits. The owner also enjoys relative freedom from most government control and reporting requirements.

Next, how important is it to me to limit personal liability for debts or claims against my business? If it is highly important, you’re most likely to incorporate the business.

Next, which legal form of business organization will result in the least amount of taxes? There is no clear-cut answer here, which is one reason any small business owner should seek professional advice based on the circumstances of the owner and the business.

However, which legal form will be the simplest to set up and maintain? Generally, sole proprietorship is generally the simplest and least regulated. In fact, if your business starts up without a partner, the law will classify your business as a sole proprietorship.

The greatest disadvantage to a sole proprietorship is that your personal assets and those of your family are not protected. Should there be financial problems or a lawsuit, your assets are at risk. Additional insurance will help minimize the risk and cover liability up to a certain dollar amount; however, you also assume greater personal liability.

With more than one owner, the business can form as either a partnership or a corporation. Partnerships come in two varieties: general or limited, both giving all partners a say in the decisions. General partnerships do not require a formal written agreement (although not having one would be a serious mistake), but limited ones do and also require the filing of a certificate. The general partnership stipulates that all partners have unlimited personal liability, but in a limited partnership, partners typically are liable only to the extent of their investment.

The main advantage of incorporation is the limited financial liability of the owner. Personal assets cannot be attached and ownership is transferred through the sale of stock shares. The corporation is a legal entity and will continue to exist until its legal dissolution, even if one of the principals in the business should die.

There are different types of corporate structures. A regular corporation has government control and reporting requirements. Corporate earnings are subject to double taxation profits, and then the shareholders’ earnings through dividends. However, an S corporation provides the limited liability of the regular corporate structure, and earnings are taxed to individual owners at their individual rates. A limited liability company (LLC) offers the benefit of limited liability without being as complex as a corporation.

Finally, the list of choices is pretty clear, but whatever you choose there are advantages and disadvantages depending on specific business purpose. Usually business people consult a tax attorney before deciding on form of business organization. So, you should as well.

People are clearly comfortable asking their friends and family about their finances. There is also a demand for good online advice. We must ensure people have the tools to make sensible and informed financial decisions throughout their lives. They say quality financial education is the key to helping people help themselves. Others say that this should ideally start in schools at the earliest opportunity. Here is a brief list of things business people do to manage their finances properly.

It is essential to establish a credit card with a small limit and always make the monthly payment. Making at least the required monthly payment is important for young adults because they have a short credit history and any blemish, such as a missed payment, can be very damaging to their credit score. To avoid situations when credit report says that you missed a mortgage payment which you never even had, it is recommended to obtain a free credit reports through the government mandated website. This technique will also help to control spending habits of business people in favor of more money set aside in savings.

This quick MBA tool helps to monitor your current value. If to add up the value of all current assets and to subtract current liabilities including home, other real estate, business interests, pension plans, stocks, bonds, mutual funds and other securities it is possible to calculate a net worth. Now it is important to make sure the net worth rises each year, not just by the inflation but by the rising value of those personal investments.

If you have no personal investments, do something today. For the beginning it is good to start with a money market mutual fund, setting up a regular electronic transfer of money from your bank account. Money fund yields rise as interest rates rise. Phil Laut, author of “Money is my friend” tells that the basic principles of investing is spending money that you saved, in your name, to increase your income. If all you have is an understanding of financial markets and don’t deal effectively with your own psychology, it is possible, but unlikely, that you will get rich, but you certainly won’t sleep at night.

How should couples handle money? This is a very important topic that is almost always clouded by family conditioning and foolish romantic notions. It is essential that both partners have money of their own to use as they see fit free from permission and judgment, even if only one of them is earning an income. However, always share all your financial knowledge and details of your investments with your spouse so that person won’t have to scurry around after your death, asking mostly strangers what you have been doing with your money all these years.

And finally, if you plan to express your purpose and your values you can’t afford to miss this. If you are looking for the best investment advisor, look in the mirror. No one will ever care more about your investment success than you do.