a)
A Sole Proprietorship |
| In this form of legal structure, the
owner of the business simply applies to do business
under a trade name from the appropriate authorities.
You can choose a fictitious name and register it, so
you’ll now be Mary Smith d/b/a (doing business
as) Miracle Maid cleaning (or whatever name you choose).
The advantage of doing business as a sole proprietor
is that it’s easy and inexpensive to set up. The
disadvantage is that the business is inseparable from
you, legally, so that if there is ever a problem with
the business (and problems do happen unexpectedly from
time to time – ask me about some stories some
time) you will be held personally responsible for all
the debts of your business. If you’re sued, for
example, people may go after all your assets, including
your bank account, your house, your car, and any other
assets you might have. |
| |
b)
A Partnership |
| A partnership is where two or more people
decide together to start and operate a business. It is
more complicated to set up than a sole proprietorship
(all partners must jointly sign a partnership agreement),
and it has the same disadvantages. |
| |
c)
A Corporate Structure |
Forming a corporation is the most popular
method of creating a business structure within which
you will run your business. You will need a lawyer to
help get the necessary documents in order. Requirements
differ from state to state. The advantage of a corporation
is that it is a limited liability entity. The assets
and profits belong to the business, and if the business
is ever sued, or goes bankrupt, your personal assets
are not at risk. (No one thinks it will happen to them,
but unexpected problems sometimes arise, and these things
can and do happen sometimes.)
There are various different types of corporations,
such as a “C Corporation”, or an "S
Corporation”. Your accountant or lawyer can help
advise you in which type of corporation will work best
for you.
If you form a corporation, your business will be officially
known as “Maine’s Maid Service, Inc.”,
for example. |
| |
d)
A Limited Liability Corporation (LLC) |
This is essentially another form of
legal entity which you can create. If you form an LLC,
your business will be known as “ABC Residential
Cleaning, LLC”, for example.
Note: You should consult a lawyer and an accountant
before deciding on what legal business structure to
use for your house cleaning business. The information
presented here is for advisory purposes only, and should
not be a substitute for professional legal advice. A
trusted lawyer should be able to help you select a structure
for your residential cleaning business, based upon your
needs, your tax status, your marital status and other
factors. |
