The Stay at Home Mother

For the next few blogs I want to share some information on various aspects of creating a home-based business. If you are just starting out with your business idea, there is a lot to consider.

I have been down this road myself and want to share some of what I have learned with moms who are contemplating going in to business.

I think its best to first define the different types of businesses you can have and the things you will need to consider to make the right choice for you.

A Sole Proprietorship is the easiest out of the three to start up. The start up costs are low as a Sole Proprietor, and there are great tax advantages (write offs) to the owner. The only drawback is that there is no name protection as a Sole Proprietor and there is no protection/separation between you and your business (ie if your business is sued or the business loses money, then you are personally liable as well.

A Partnership is when two or more people decide to combine their skills and resources and go in to business together. Both parties involved are responsible for the overall management of a business, and each are personally liable for all debts with the business.

When entering in to a Partnership business, is important to outline the terms and conditions of your partnership in a legal agreement. In the agreement you will also need to include how you want to split the profits.

A Corporation is a legal entity that is separate and distinct from its owner(s). With a corporation, you have limited liability. The owner and the company are separate and distinct. The name of the Company is also protected.

When you are seeking to incorporate a company, it is best to consult with a lawyer to review all the circumstances regarding shareholders, reporting and maintaining proper records. You are held to a higher standard with a corporation. Incorporating a company is the most expensive venture to start out of the three options, so you may want to look at doing this at a later date, after you have established your business.

So explore which business type is right for you and make an informed decision. And I’d love to hear from other moms who would like to share their own thoughts on what to consider when you are just starting out!