University of Phoenix Material
Business Entity Matrix Format Business Entity | Issue | | Characteristics | Formation | Liability | Taxation | Global Implications | Sole Proprietorship | One-person entity where debts and liabilities of the business are also personal debts and liabilities of the principal. Simplest form of business organization | No paperwork is required unless local licensing requirements-form to be filed if business name does not contain owner’s name | The owner is fully liable for all debts of the business and personal assets are subject to the claims of business creditors | Not subject to corporate income tax and no tax return is filed on behalf of business. The reports of business income or business loss is based on individual tax rate | The internet has provided more opportunities for even sole proprietors to go global- Collecting money owed can be challenging through laws and regulatory agencies as they differ between countries | Partnership | | | | | | Limited Partnership | | | | | | Corporation | A fictitious legal entity that exists as an independent “person” separate from its principles. A corporation can be privately or publicly held. | A corporation probably has the most formal filing and reporting requirements. In order to form a corporation you have go through state law filing, and formation is governed through state statutes. | Limited liability because the owner of the corporation, stockholders, is not liable for its debts or acts. | Considered a separate legal, taxable entity from the owners for income tax purposes. Meaning corporations pay tax on their earnings and then the tax is paid again if corporate earnings are distributed to shareholder in the form of dividends. This is known as double taxation. | |

Business Entity | Issue | | Characteristics | Formation | Liability | Taxation | Global