...Forms of Business Lurene Flynn Law/531 October 24, 2011 Christine J. Benway, J.D. Instructor Forms of Business Determining the type of business to open is very important in order to know the business form that will be used. Knowing the business structure is important because it determines how the business income will be taxed. This paper will discuss the different forms of business, give examples of each form, and justify why the corresponding business form is preferred. Sole proprietorship according to Cheeseman (2010) is the form of business in which the owner is actually the business: the business is not a separate legal entity (Cheeseman, 2010, p. 530). “An individual starts the business in his or her own name and does not require any special legal organization beyond the normal requirements such as licenses or permits” (Georgia Trend, 2006/2007, p. 34). Beauticians are great examples of a sole proprietorship. Beauty shops are usually owned by one person, while having other people working in them.This type of business form is preferred by beauticians or a plumber because it is easy, no formalities, and most importantly no federal or state government approval is required. According to Cheeseman (2010) the owner has the right to make all management decisions concerning the business, including those involving hiring and firing employees (Cheeseman, 2010, p. 530). A sole proprietor owns all off the business therefore he or she receives...
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...addressing a plan for the operations of a sole proprietorship business in a service or manufacturing industry, I will discuss the plan of starting a Business Consulting Agency to provide assistance to businesses. Organization & Communication The relevant issues associated with opening a consulting business are building cliental; establishing lasting business relationships with business owners and providing quality service when needed. The primary services that are offered include market feasibility studies, business plans, operational reviews, re-engineering, strategic planning, seminars and workshops. We strive to provide our clients with business services that help them become more successful and to become a leader in consulting to small businesses. In order to keep our overhead costs down, Business Consulting Agency will be located in the home of Monica Lathan which is equipped with a computer, fax machine and photocopier. Business Consulting Agency is a sole proprietorship, owned by Monica Lathan. As the business grows the firm may develop strategic alliances with other companies. Business Consulting Agency will initially only have one employee, Monica Lathan; additional staff support will be obtained on a subcontract basis and secretarial service will be contracted out as required. Business Consulting Agency is in the process of obtaining a bank loan for $35,000 to finance the start up of the business. During the first year of operation, our key objective is to develop...
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...value, which help users foretell the outcome of events in the past, present, and future. Another reason relevant information is effective is that it is presented in a timely manner early enough for the user to consider when making a decision. It also helps users clarified and adjusted expectations in the past because relevance information has feedback value. Reliability is another quality that makes its accounting information effective. Reliable information is verifiable, it represents what actually happened, and it’s unbiased. Comparability and consistency are two secondary qualities that make accounting information useful. Comparability gives users the ability to compare information between companies in the same industry to make their business decisions. Consistency is another important quality for accounting information to be...
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...5–7 pages) about the forms of business organizations listed below. Your report should have a subheading for each business form with a brief description of the business form and a brief discussion of the key characteristics, advantages, and disadvantages of that form of organization. Differentiate among the following forms of business by explaining how at least six of the seven key characteristics listed in the introduction to this task apply to each of the following organizational forms: 1. Sole Proprietorship 2. General Partnership 3. Limited Partnership 4. C-Corporation 5. S-Corporation 6. Limited Liability Company SAMPLE FORMAT Sole Proprietorship: Write a brief description of the form of business ownership, advantages and disadvantages. The key characteristics of the form of ownership should be addressed by discussing six of the seven bullet points below. You will want to have the heading as the form of business ownership and then use the bulleted list below for the key characteristics. • Liability • Income Taxes • Longevity or Continuity of the Organization • Control • Profit Retention • Location • Convenience or Burden General Partnership: Write a brief description of the form of business ownership, advantages and disadvantages. The key characteristics of the form of ownership should be addressed by discussing six of the seven bullet points below. You will want to have the heading as the form of business ownership and then use the bulleted...
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...LIT1 Task 1 B.S Accounting A. Business forms are categorized into six different organizations. These business forms make up proprietorships, partnerships, corporations, and Limited liability companies. All forms of business have characteristics descriptive of each business form. Identifying the characteristics of each business while accounting for the advantages and disadvantages will help to clarify each form of business. 1. a. Sole proprietorship: A sole proprietorship is a company formed with the ideas and direction of one individual. This type of company is formed on the basis on one individual. A company formed on individual ownership is formed with the understanding of not being incorporated. The success and failure of the company depends on one person. This type of proprietorship has the advantage of just being in one person’s hands. All the decisions are made by one person, all the profits goes to one person. A disadvantage of this type of proprietorship is that the individual has nobody to turn to when he needs help; the responsibility is in his hands. Business entity characteristics fall into seven categories which we will cover below. Liability – There is no real line between business or personal liability and assets, they are the same in sole proprietorship. The outcome of success or failure is determined by the sole proprietor. Government does protect life insurance pay outs in case the business owner dies. Income Taxes – Sole proprietorships have an advantage...
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...There are three legal forms of business: Sole Proprietorship, Partnership, and Corporation. The inventor scenario sounds like the business would start as a Sole Proprietorship since there are limited finances and the inventor’s net worth is low. However, with the new technology being introduced this business could quickly grow and eventually turn into a Partnership or possibly Corporation. A Sole Proprietorship is the easiest business to start with little overhead cost. All decisions are made by the proprietor, so no worries with disagreements since the proprietor is the boss and getting started doe not cost a lot. The downfall to being a Sole Proprietor is you are an extension of your business so if things start to fall apart your personal assets can be seized. The proprietor has to make sure they have taken all the necessary steps in education and training to make sure the business doesn’t look weak and not well managed. A Partnership is a great way to start a business with a friend or family member and luckily there is no set limit on the amount of partners one business can have so a whole class could start an amazing business. The important thing to remember about a partnership is that everyone, no matter the number is equally responsible for the debt created to run the business. Very different from the Sole Proprietorship where its one for all and the Partnership is all for one. The disadvantages of a Partnership include possibly not being able to mutually agree,...
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...Sole Proprietorship: Sole Proprietorship is a very common form of small business organization. Benefits include having complete and total control as to how the business is run, marketing, hours, as well as the immediate dissolution of the business. Disadvantages range from personal liability for the business. A sole proprietor is also held responsible for all taxes for the business as personal income. Liability: A sole proprietor is held personally liable for any errors or damages caused by the business. The assets of the owner are at risk should the business be involved in a lawsuit. Income Taxes: In a sole proprietorship, the business owner is responsible for all income earned through the business, and must be reported as personal income. This means that while there are fewer tax forms and returns to be filed, the tax liability may be greater than other forms of business. Longevity/Continuity: In many ways, this is a very attractive attribute of a sole proprietorship. A sole proprietor is in complete control of not only the start, run, and dissolution of their business, but they also have the ability to pass the business along to their heirs with very little red tape. There is no need to file legal paperwork to dissolve the business; the owner can simply cease operations. Control: Much like longevity or continuity of the business, a sole proprietor has complete control over business operations. At his/her discretion they can make the decisions as they see fit, without...
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...proprietorship or sole proprietorship is a business operation in which one person or one entrepreneur owns or holds the business. It is one of the simple business operations because it gives full control of the business and it is simple to get started with and set up. This is perfect for small business that is just starting up, small stores like retail stores, hardware shop, retail shops , barber shops, repair shops or other small business. You own the business and you’re your own boss. Moving on to partnerships these maybe the same business mentioned above or any other business but this time you are with a partner this is not all bad, partners can bring better change, they may have better skills and quality to make a business grow and plus it also helps to share the cost but you will also have to share the profits but all that burden on one entrepreneur can be to much and he or she may need help. The last business organization is cooperation this is when stocks get involved the owner ship of the company is in stocks so if you are a investor in a cooperation the company will give you shares of stocks and these are what the company is worth this is also proof that you have some owner ship of the company. The easy things about stock are that are easy to sell unlike partnerships or sole proprietorship, a investors can by stock and investing small amounts of money most cooperation’s have lots of stock holders. In conclusion all of the business operations have their advantages...
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...Small Business Idea University of Phoenix Accounting Acc/561 Norsey Dorris June 27, 2012 The government has decided to kick start another program to release funds for small businesses across the country. This can be an exciting and overwhelming experience at once to start-up a new business, especially with the help of federal funding. To incorporate or not to incorporate, that is the question. There are many decisions to make once a business idea (hopefully a business plan has been created) is ready to launch. Whether it is a small restaurant, local liquor store, or an auto repair shop, one of the main decisions is to what type of organization or business entity to create. There are four main forms to choose from: Sole Proprietorship, Partnership, C Corporation, and S Corporation. Sole Proprietorship A sole proprietorship is one of the easiest and main ones for a small business owner. The business will be owned by one person and it is simple to set up and gives the individual control over the business (Kimmel, Weygandt, & Kieso, 2009). The sole proprietor can run the business for any duration of time and sell it when he or she sees fit. The person can also pass the business to down to his or her heirs. In addition, compared to corporations, a sole proprietor will receive favorable tax advantages. The owner will pay taxes on his or her personal income, which is more favorable than the double taxation that occurs in corporations. Paperwork,...
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...An insurance agent career can be fulfilling and lucrative. Agents help people protect their homes, businesses and personal belongings. Depending upon what insurance agent career path is taken, agents may also be helping others to protect their families. Insurance agents have unlimited earning potential. But is an insurance agent career the right choice? The description of an insurance agent career has changed over the years, but the essential job description remains the same. Agents have to enjoy working with people in order to have a successful insurance agent career. Insurance agents have to face some very stressed out and unhappy customers in the event that they experience a loss, and it’s up to the agent to run interference with a cheerful and positive attitude. Negotiating skills, motivation, a comfort level with insurance advice and some computer and internet skills are also a necessary part of the insurance agent job description. Independent insurance agency jobs work for multiple insurance carriers, but aren’t officially employed by any of them. The benefits of an independent insurance agent career include a higher earning potential than working for an insurance company. In addition, the freedom of self-employment allows people to decide who they want to work with and where to place insurance. The downside is that a lot of new independent insurance agent careers fizzle out quickly without the marketing and training provided by an agency or insurance carrier. Taking...
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...Business Entity Matrix Blake M. Reimert LAW/531 Beverly Spencer October 1, 2012 Business Entity Matrix |BUSINESS |Formation |Control |Liability |Continuity |Taxation | |Entity | | | | | | |Partnership | A general partnership | Partners | Tort liability: | the usual rule is that| Partnership does not | | |is a business entity in | |Partnership is liable |the death or withdrawal|pay federal income | | |which two or more | |for tortuous act of a |of one of the members |taxes, partnership | | |co-owners engage in | |partner, employee, or |dissolves the |files information | | |business. The partners | |agent committed while |partnership, although |return, income losses | | |own the business assets | |the person is acting |an appropriate |reported on individual | | |together. Unless a | |within the ordinary |agreement in the |partners’ personal | | |partnership agreement | ...
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...ACC 561 Jared Jones Forms of Business Organization Introduction There are four ways that a business can organize itself. The owners and partners in this newly formed business may share in a variety of responsibilities and must decide which form their business should take on. The four basic ways a business can be organized is a sole proprietorship, partnership, C corporation and S corporation. There are a variety of advantages and disadvantages to each. When it comes to Tax implications, Legal implications and Accounting implications this is especially true. Below is an analysis of the various forms of business and the advantages and disadvantages to each, along with various implications associated with taxes, legality, and accounting. Sole Proprietorship Sole Proprietorship is a type of business run by a lone individual. This individual owns the business, and deals solely with all of the losses and all of the profits. The owner also is responsible for all of the liability and has complete control of business operations (Carr, 2011). Typically the business will have an income statement and a balance sheet. The owner through personal income tax return pays all taxes for the business. There are several advantages to this form of business: It is generally not difficult to organize due the requirements of registration not being as harsh to abide to and the financial capital is relatively small. Also, the sole owner has the ability to make all decision for the company...
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...Business Structure Business Structure Being your own boss or in other words owning your own business can have its advantages as well as its disadvantages. As an entrepreneur you are able to take control and direct the culture of your organization and determine what key factors will make your business successful and outdo the competition. The flexibility that you can establish is beneficial to being able to balance your work and personal life with family and friends; all while you are challenging yourself by the new opportunities that will constantly be presented and the creativity that goes along with it. More importantly establishing what type of business is the most important; sole proprietorship, partnership and or a corporation. A sole proprietorship, often being identified as one-person operation, is the most common business structure throughout the world. With a sole proprietorship you have complete control of your organization, making all decisions from your target market, employees, location, and so on. It is simple and easy to establish this type of business structure and the start-up cost are low as well. There are several disadvantage of this type of business structure. Personal liability is a major disadvantage because it is not separate from our business; meaning creditors can sue you directly. Another issue is the ability to raise money to start your business. Most lenders are fearful to financing sole proprietors simple because if the business fails no money...
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...refers to a form of organization owned by a single individual. In this business, a single person makes all the decisions and does not have to engage a legal department to approve contracts. The owner of such a business can only use personal funds even though he or she may have separate checking and savings accounts for the business. The first characteristic of this form of business enterprise is liability. A sole proprietor suffers from unlimited liability. The owner becomes liable personally for all the obligations and debts of the business. The second characteristic is income taxes. Businesses pay federal income tax just like individuals. In a sole proprietorship, the owner pays income tax only once on the business income, which he or she reports on their personal income form. The third characteristic is control. In a sole proprietorship, the owner makes all the decisions concerning the business. In this business, the owner does not have to grant control to other people. The fourth characteristic is profit retention. If a sole proprietorship makes profits, the money belongs exclusively to the owner. The reason is that the owner and the business are one. The fifth is location. The owner can move or expand the business to a different state without consulting anybody. This is because the owner is the sole decision maker. The sixth characteristic is convenience or burden. The owner makes sure that the business complies with all meeting, reporting, and other regulatory requirements...
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...eventually increase the total profits in the future. Ultimately, the choices financial managers make should maximize shareholder wealth, which is achieved by maximizing the stock price. While the managers should do their best in maximizing the shareholders’ wealth, they should ensure that their behavior is ethical. Ultimately, the owners will only benefit if the business is operated within the legal and ethical limits. Q2. What is a limited partnership? Briefly explain what are the advantages and disadvantages of being a general partner and a limited partner. Suggested Solution: A Limited Partnership (LP) is a vehicle for doing business and is a subset of partnership. It is a partnership consisting of a minimum of two partners, with at least one general partner and at least one limited partner. An LP does not have a separate legal entity from the partners i.e. it cannot sue or be sued or own property in its own name. A general partner is liable for all debts and obligations of the LP. This is unfavorable to the GP but he or she has control over the operations of the business. The advantage of being a limited partner is such that he or she is not liable for debts and obligations of the LP beyond his agreed contribution. In addition, the LPs are able to leverage on the expertise of the GPs but the former are unable to take part in the management of the LP. Q3. Briefly discuss whether agency problems would arise in sole proprietorship...
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