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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.
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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. |
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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. |
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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. |
