Software Publishing: The Form Of Your Business

From Dwayne Wright

This is part of my ongoing series or articles about setting up your own software publishing business (because FileMaker is very good option for doing that). This was originally published by me in a guide called FileMaker Software Publishing back in 2002.

Typically there are three main categories of business types. These are sole proprietorship, partnership, and corporations. Each of these has its advantages and disadvantages. At one time, there used to be a legal protection reason for going up the ladder. I’m not a lawyer but the following is what I gleaned from researching the topic.

The sole proprietorship is the most popular and most easily set up. However, there are two more choices for some very good reasons. One of the problems with a sole proprietorship is that it provides no liability protection. Your personal assets and your business assets are joined at the hip and a problem with either could directly affect the other.

A partnership consists of two or more individuals. The combined assets and skill sets of two or more people have a very good possibility of being more effective than a sole proprietorship. However, you have no more liability protection with a partnership than you do with a sole proprietorship. You also have the group dynamic potential for problems or at least the potential that a difference of opinion may make a problem more sticky to resolve.

Finally we have the corporation method and here you have the potential for more liability protection than the other two setups. It’s not bulletproof and in today's day and age, it's not uncommon for a legal issue to pursue an individual based upon a problem with the corporation. However, the corporation normally provides the potential of more legal protection to the individual. There are various forms of corporations, that have their own set of advantages and disadvantages. One of the most popular any easy set up corporations is called the of limited liability corporation or L L C. It is possible for an individual to get this type of corporation setup without the use of a lawyer but you may possibly miss something a professional legal advisor would have caught.

Anyway, this is just the tip of the iceberg and I would recommend doing as much research as you can before deciding which direction to take the plunge. In the case of a moonlighting situation I’ve spoken of, all three options are viable.
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