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Structuring Your Business.pptx
- 1. StructuringYour Business Sandy Mark – Manager,Women’s Initiative
- 2. A Business Structure is a category of organization that is legally recognized in each jurisdiction and characterized by the legal definition of that category. BusinessStructure The major forms are: - Sole Proprietorship - Partnership - Corporation - Co-operative - Non-Profit - Social Enterprise - Beneficial Corporation (B- Corp)
- 3. The business structure you choose depends (to some extent) on what type of person you are: • Cooperators are the first to step up to the plate. They give to the group almost immediately, even if it's not certain that their efforts will be rewarded. • Free riders are at the other end of the spectrum. They chip in far less than anyone else, coasting on the contributions of others. • Reciprocators split the difference. They take a "wait and see" approach, hanging back until it's clear that they'll serve their own best interest by helping out the team. BusinessStructure It also depends on your VALUES. The market can incentivize the businesses that reflect the values of the consumers.
- 4. Sole Proprietorship A sole proprietorship is an unincorporated business owned by a single individual. Freelancers and many other self-employed people are, in legal terms, operating a sole proprietor business. Benefits Challenges • You have all the control • For those who do not like to fill in papers, you don’t need to…just separately deal with business revenue and costs in your personal income tax • You have all the problems and challenges • You miss out on tax savings • You miss out on advantages of incorporated businesses
- 5. Partnership Benefits Challenges • You have support of your partner(s) reducing your own responsibilities • Your partner(s) will bring skills and may have access to finance as well • Some partners may not want formal agreements due to your ‘friendship’ but reduce problems in the future by creating agreements and policies together. A partnership can either formal or informal
- 6. Corporation A corporation is an organization that is owned by its stockholders. The corporation is considered an independent legal entity and, as such, is responsible for its actions and debts. Benefits Challenges • Incorporation shows yours is a credible and serious business • Tax benefits as businesses are taxes at a lesser rate • Many opportunities for incorporated businesses are not available otherwise • You will need to pay a fee for incorporation and ensure you understand the paperwork and your reporting obligations
- 7. Co-operative A co-operative is a specific incorporated business that is an enterprise that is a business and an association of people. They are based on the values of: • self-help • self-responsibility • democracy • equality • equity • solidarity In the tradition of their founders, co- operative members believe in the ethical values of honesty, openness, social responsibility and caring for others. The co-operative principles are guidelines by which co-operatives put their values into practice. Benefits Challenges • A group of people (3 or more) brings 3 x the skills, effort, and learning to the table. • Funders always are more comfortable with a team rather than just an individual • The Co-op movement provides training, some grants and access to finance and some access to tax credit programs for member investments • Co-ops work together thus can provide a ready market • Everyone involved must learn to Co-operate! Not necessarily easy. • Everyone must learn how to make decisions through a consensus process. • As another type of Corporation, proper record keeping and reporting is needed.
- 8. Non-Profit • A Not-for-Profit is a community organization which cannot provide profit to its members or its directors • In exchange, the government does not apply business tax to the organization • The Not-for-Profit structure can sometimes be a good form if the initiative is looking for government support…usually when the social mission of the venture does not operate in ”the market” • Workers in a Not for Profit can make good wages • Not for profits can operate social enterprises in the market in order to help fund their operations. (See Social Enterprises next)
- 9. Social Enterprise • A Social Enterprise is a business that has social, environmental as well as economic goals. • Not-for-profit organizations and charitable organizations can operate a social enterprise or can “own” a subsidiary social enterprise • A business that adheres to and can “prove” clear social, environmental as well as financial goals can also claim social enterprise status Benefits Challenges • The businesses values are up front • Businesses that take a strong value stand, can benefit from social enterprise grants and other specialty funding • If you claim a value, you must be able to PROVE it…so this requires an integrated data management system which has costs and management requirements
- 10. BeneficialCorporation (B-Corp) • A benefit corporation (b-corp) is an organization that commits to the triple-bottom line -- includes social and environmental results as well as financial results. • A b-corp seeks to identify social missions and demonstrate corporate sustainability efforts; • In return, the organization may be eligible for certain types of legal protection, tax benefits and favored investment opportunities • B-corps need to go through an assessment process—best when you have scaled your business