Of the 4 main legal entities in business, which type is


Tailored By Les Nunn O


ne of the important matters to consider in your ranching business is in what legal en-


tity you should operate your ranch. There are 4 common ways to


legally organize your ranch — sole proprietorship, partnership, corpo- ration and limited liability company. You should seek the advice of


your lawyer and accountant on set- ting up your ranching business. What follows is a general overview of these 4 types of business entities. It is not meant to be legal advice. Which is best for you? Let’s look at each type.


80 The Cattleman March 2014


Sole Proprietorship This is the simplest and easiest


to start. There is only 1 owner. No legal documents are necessary. You simply state you are in business and that does it. You can call your ranching business whatever you want, but there is only 1 owner — you! Advantages of a sole proprietor-


ship are that it is easy to start, there is only 1 owner who can make all decisions for the business, and that 1 owner gets all the profi ts. Disad- vantages are that the business ends upon the death or bankruptcy of the


1 owner, that 1 owner must pay all the bills, and the 1 owner is liable for all debts of the company.


Partnership If there is more than 1 own-


er, it is usually a partnership. A partnership can be formed by 2 or more people. It can be done verbally, since no writing is required for most partnerships. Partners can make an agreement as to who owns how much of the company, but if there is no agreement to the contrary, all partners are equal owners. Should there be 2 partners, each


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