What are the different business structures, and how do I know which one to choose?

A business structure refers to the legal framework under which your business operates. This structure impacts ownership, management, and responsibilities. Your business structure varies based on your business type and its registration.

For example:

• If you’re an unregistered small business owner, your business type would be Individual.
• If you’ve registered your business and are personally responsible for its operations and taxes, it would be a Sole Proprietorship.

Here are the business types and structures supported in Zoho Payments:

Individual: A business operated by a single person, typically unregistered, and suited for small-scale businesses, freelancers, or contractors.

Company, Limited Liability Corporations (LLCs) and Partnerships: Registered entity, often with multiple owners seeking liability protection and more formal management structures. These include:

• Sole Proprietorship: A simples structure for registered businesses owned and managed by one person.

• Single-Member LLC: An LLC with one owner. This structure separates your personal assets from your business and is suited for structured small-scale businesses.

• Multi-Member LLC: This is a Limited Liability Corporation (LLC) with more than one owner. It is commonly used by small business partners or groups who want a flexible and organized way to manage their business together. In an LLC, the owners have liability protection, meaning they are only liable up to the amount of their investment.

• Private Corporation: A business owned by shareholders but not publicly traded. This structure is ideal for raising capital while retaining control within a small group of investors or shareholders.

• Private Partnership: A business owned by two or more individuals who share profits and responsibilities. This structure is commonly used by small business partners who want to combine their resources and expertise. In a partnership, all partners typically share unlimited liability for the business’s debts and obligations.

Non-Profits (Trust/NGO): The business operates to serve a social cause, and any profits are reinvested into its mission. Non-profits are typically registered and are tax-exempt under specific conditions.

HUF (Hindu Undivided Family): A family-owned and managed business with a single member acting as the head. The assets and liabilities are shared among family members.