A. BUSINESS MODELS:-
Business in United States of America (USA) can be carried out in the following manners-
- Sole Proprietorship– Owner remains personally liable for lawsuits filed against the business; no state filing required to form a sole proprietorship; it is easy to form and operate and the owner reports business profit and loss on their personal tax return.
- Limited Liability Company-A limited liability company (LLC) is a hybrid type of legal structure that provides the limited liability features of a corporation and the tax efficiencies and operational flexibility of a partnership. LLC formation involves-
- Selecting a Business Name- it must be different from an existing LLC in your state, it must indicate that it’s an LLC (such as “LLC” or Limited Company”) and it must not include words restricted by your state (such as “bank” and “insurance”).
- Filing the Articles of Organization- The “articles of organization” is a simple document that legitimizes your LLC and includes information like business name, address, and the names of its members.
- Creating an Operating Agreement- Most states do not require operating agreements. However, an operating agreement is highly recommended for multi-member LLCs because it structures LLC’s finances and organization, and provides rules and regulations for smooth operation. The operating agreement usually includes percentage of interests, allocation of profits and losses, member’s rights and responsibilities and other provisions.
- Obtaining Licenses and Permits- Once the business is registered, applicant must obtain business licenses and permits. Regulations vary by industry, state and locality.
- Announcement of Business-Some states, including Arizona and New York, require the extra step of publishing a statement in the local newspaper about the LLC formation.
- Cooperative– A cooperative is a business or organization owned by and operated for the benefit of those using its services. Profits and earnings generated by the cooperative are distributed among the members, also known as user-owners.To start up, a group of potential members must agree on a common need and a strategy on how to meet that need. An organizing committee then conducts exploratory meetings, surveys, and cost and feasibility analyses before every member agrees with the business plan. Not all cooperatives are incorporated, though many choose to do so.
Steps involved in establishing a cooperative involves- Establishing steering Committee (a group of people who share an idea for a cooperative forms a steering committee and develops a plan and a timetable for researching and developing a co-op); Conducting feasibility study; Drafting articles of incorporation and byelaws; Preparing a business plan; Securing finances and recruiting members.
- Corporation- A corporation (sometimes referred to as a C corporation) is an independent legal entity owned by shareholders. The corporation itself, not the shareholders that own it, is held legally liable for the actions and debts the business incurs.
To register a C Corporation following details/documents are required to be filed with the state’s Secretary of State Office- Corporate name, business purpose, registered agent, incorporator’s name, signature and address (This is the person or company preparing and filing the Certificate of Incorporation with the state), Corporations must outline the number of shares of stock they wish to authorize, details of directors, officers and legal address of the company.
Some states require corporations to establish directors and issue stock certificates to initial shareholders in the registration process. Once the business is registered, business licenses and permits are required to be obtained. Regulations vary by industry, state and locality.
- Partnership-There are three general types of partnership arrangements-
- General Partnerships- Profits, liability and management duties are divided equally among partners.
- Limited Partnerships(also known as a partnership with limited liability)- allow partners to have limited liability as well as limited input with management decisions. These limits depend on the extent of each partner’s investment percentage. Limited partnerships are attractive to investors of short-term projects.
- Joint Ventures-act as general partnership, but for only a limited period of time or for a single project. Partners in a joint venture can be recognized as an ongoing partnership if they continue the venture, but they must file as such.
To form a partnership, registration with the concerned State (usually done through concerned Secretary of State’s office) is required. For registration a business name is to be established. Once business is registered, requisite business licenses and permits must be obtained. Regulations vary by industry, state and locality.
B. ENTREPRENEURSHIP IN USA:-
America also has several structural advantages when it comes to entrepreneurship- be it the existence of the world’s most mature venture-capital industry, or a tradition of close relations between universities and industry, or the existence of an immigration policy that, historically, has been fairly open. Besides this there have been several governmental initiatives in the recent past to acknowledge, improve and enhance entrepreneurship in USA. The Global Entrepreneurship Program (GEP) being one of the few, which was established as a vital link between government and private sector to enhance global entrepreneurship and innovation.