The majority of the working population have herd instinct, and will always work for a "boss", simply because everyone else does, hence the "herd" mentality. But for the very small minority that have entrepreneurial ideas the dream is, and always will be, to come up with an idea to start a business and become rich from your own efforts.
Based upon this motivation, many businesses fail each year, simply because they are not familiar with the basics involved in running
a business.

I will give you a number of suggestions you can use to try and ensure that your chances for success, when starting your business, are greatly improved. You need to be aware that any and all business ventures contain certain inherent risks. We do not endorse that any one way is the right way or that our suggestions are the only correct way. On the contrary, we advise that before investing any money in a business venture, you seek advice and help from a qualified accountant and/or solicitor, when ever necessary. There will be times when you cannot dispense with their services. Money spent on their fees might feel like a big and unnecessary expense but they can help to avoid even larger expenses, such as total or partial loss of your investment, or expensive legal fees.

The first thing you should consider before starting or purchasing a business is the legal form, under which you'll be operating, your business. There are basically four choices: sole ownership, partnership, limited partner-ship, or as a corporation.

Each has a number of advantages and disadvantages, so you need to decide which will suit you best. Here follows a very simplistic view of your choices. This is certainly one time that you should have a chat with an accountant, to understand which will suit you best, as it can get fairly complicated.

1 ) As a sole proprietor or partner of a business you'll be paying taxes on your overall earnings, after all the expenses of running the business, much the same as if you were in a salaried or hourly paid job. Whether you do or don't take out money as a salary will have no bearing on the earnings of your business and tax return. You should be better off than a salaried person because of all the expenses you can claim for. You are solely responsible for any and all debt that your business may incur. Any and all property can be taken to pay any debts if you get into trouble.

2) As a partnership, all concerned in the partnership are responsible for any unpaid debts, which you may think will spread the liability. You need to know and trust your partners as you become responsible any debt that they may incur. If they desert the problem business you have to bare the cost of the entire debt.

3) A Limited partnership needs to be registered, and it is similar to creating a new limited company. However, you cannot buy an "off the shelf" limited liability partnership as you can a limited company. The original documents have to be prepared with the names of the first set of "real" partners.

4) A limited company allows you to run the business without putting your private property at risk, should the business get into bad debt. But it does have more complicated accounting systems.

For a few people starting a business is a form of ego-gratification, and they create a company just for the prestige value - just to say, "I am a director of a company." Just don't do there! Make an informed decision after seeking the appropriate advice.

This article has been written by Valerie Dancer. I have been self-employed all my working life. I started up my own company 18months ago, so appreciate the problems involved in business start ups.