A business entity is one formed and administered as per the commercial law so as to engage in business activities. There are few types of business entities including; partnerships, sole proprietorships, limited liability companies as well as corporations. These objects vary from localities such as countries, provinces or states (Galera, Giulia, and Carlo 2009). However, these entities are governed by almost similar rules.
The type of entity to be chosen depends mainly on three factors: taxation, liability and record keeping. These factors will have an impact and will be dependent on the amount of taxes you will have to pay, the paperwork your business will be required to fill and the ability the business has to raise capital (Ayotte, Kenneth, and Henry, 2012). Different business entities may prefer a sole proprietorship, public limited company or partnerships depending on their taste and preference.
I would recommend a general partnership for this kind of business. Partnerships can be of two types: a general partnership, and a limited liability company. A general partnership is brought about when a sole proprietor brings on a first partner. No paperwork is needed to complete the company since a mere handshake and smile makes the business official (McQuaid, and Ronald, 2010). It is almost similar to the limited liability company with an exemption of filings and paperwork. In a general partnership, each partner holds equal responsibility for debts, taxes and legal judgments made in the business.
The general business is recommended and designed for small firm’s structures with more than one owner as in the case of starting a new health care services company. This entity does not require much legal assistance in its formation and structure and taxes are pass –through (all income from the business is only taxed once). In this case, the business will operate in the health sector hence a partnership will be more appropriate. However, a company in the health sector will require that the proprietors get the necessary licences from government health department so as to ascertain that they are qualified to offer health services. Other legal requirements may include operating licences, local authority clearance and a tax compliance certificate.
In conclusion, the general partnership is most suited for this type of activity since it requires no additional legal documentation (Kaplan, Jack, and Anthony 2009); it requires no additional filing or paperwork and is most suited for the small business of starting a new healthcare service company.
Ayotte, Kenneth, and Henry Hansmann. “Legal Entities as Transferable Bundles of Contracts.” Mich. L. Rev. 111 (2012): 715.
Galera, Giulia, and Carlo Borzaga. “Social enterprise: An international overview of its conceptual evolution and legal implementation.” Social enterprise journal 5.3 (2009): 210-228.
Kaplan, Jack M., and Anthony C. Warren. Patterns of entrepreneurship management. John Wiley & Sons, 2009.
McQuaid, Ronald. “Theory of organizational partnerships: partnership advantages, disadvantages and success factors.” 2010.