Imagine that you decide to build a storage unit facility in your home state–you pay your taxes as necessary and got the right permits to set up shop–but you don’t file any special paperwork interacting with the Secretary of State’s office where you live. What just happened? You just started either a sole proprietorship (if it’s just you) or a partnership (if you share the profits and managerial authority with anyone else). There are no formalities that you must go through in order to create a sole proprietorship or partnership–it is the default rule created by law unless you file something to indicate otherwise.
This can have scary consequences for people unfamiliar with how the law interacts with their business conduct. For instance, if you start this storage unit and agree to split the management authority and share the profits with someone else, you are assuming the liability for their … Read the rest of this article!