...Business Structures LaGloria Williams FIN/571 April 9, 2015 Travis Hayes Every business in the world has a structure to it. It could be a small local business like a boutique or a large corporate business like a popular bank. Having a business structure to your business is what helps determine what type of ownership takes place. There are three main business structures, they are known as; sole proprietorship, partnership, and corporations. These three business structures are important to know when opening a business. This paper will describe the business structures and discussed the advantages and disadvantages that take place in each one. The first business structure is sole proprietorship. Sole proprietorship is a business that is owned by only one person. An example of a sole proprietorship business is a local floral shop; this is because it is a small business. When having sole proprietorship over a business it comes with a lot of positive and negative responsibility. It is very easy to start a small business for someone wanting sole proprietorship. The owner has complete authority of all of the decisions made for the business. The income taxes are lower than other business and easier to handle. The sole proprietor of the business also gets to keep all profits made from the business, meaning they do not have money to pay out to anyone unless there are employees of the business. The negative part of being a sole proprietor of a business is that the owner...
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...Business Structures Encarni Gallardo FIN/571 11/09/2015 Arnold Harvey Introduction How a company organizes itself in order to conduct business is called business structure (Parrino, Kidwell & Bates, 2012). The size of the company, the type of business, the financial risks, the type of liability, the amount of man power needed among other factors play an important part in the choosing of a business structure that can be more efficient and more beneficial for the company and sometimes the consumer. Sole Proprietorship A one owner company, sole proprietorship might be the easiest business structure to set up but the one that is riskier since the owner is responsible for all the debt and any other financial risks the business might acquired. This is ideal for a low risk business, with little need for control and that is not affected easily by the trends in the economy. Partnerships Also low risk and appealing to small business, individuals enter in partnerships when there is more than one owner. The owners enter into a legal contract that explains the roles, rights and obligations of each individual. In a general partnership, all partners are equally responsible for the debt and obligations of the company regardless of their initial investment. In order to address this issue if this is a concern to the partners, the individuals can enter into a limited liability partnership. This type of partnership holds the partners liable to the total amount of their initial...
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...Business Structures One of the first steps before starting business should be choosing the proper business structure of the company as each type of business structure will have its own legal and tax implications. The types of business structures include sole proprietorship, partnership and corporation. Sole Proprietorship A sole proprietorship is the most common type of business in United States. This type of business typically consisting of the proprietor and a handful of employees. In Sole Proprietorship business type, the owner of the business is entitled to all profits and handles all your business’s debts, losses and liabilities. The advantages of Sole Proprietorship include complete control of the business, Ease and inexpensive to forming the business and easy tax preparation as Sole Proprietorship is not taxed separately. Disadvantages for this type of business include unlimited personal liability, hard to raise capital and heavy burden as you handle success or failure of the company. Partnership A partnership consists of two or more owners who have joined legally to manage a business. Partners of the business contribute to all aspects of the business, including decision making and raising money for the business. To form a partnership business, all owners enter into an agreement with all the roles and responsibilities of each owner. They also agree on how profits are shared and how ownership will be transferred in case of specified events, such as the retirement...
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...Business Structures March 1, 2014 Law 531 Charles Houle Business Structures There are several different types of business structures available to a person who is interested in starting a business. The following scenarios will illustrate a preferred form of structure as well as what documents are required for the formation. The business structures to be examined are sole proprietorship, partnership, limited liability, S Corporation, franchise and the corporate form. Sole Proprietorship A person wants to start their own business where they do not answer to anybody but themselves regarding the company. The sole proprietorship maintains a business structure where that one person retains complete control and decision making ability over the business. There are very few formal business requirements imposed on this structure, corporate tax payments do not exist, there are minimal legal costs to form the structure and the sale or transfer can take place at the discretion of the owner. This structure is preferred for those who are likely not investing heavily in capital infrastructure requiring external investors. In order to create a sole proprietorship a business name, location and business checking account must be established. A business license must be obtained from the locality. No legal documents, meetings, minutes, or complications surrounding shares of the business. Partnership (General & Limited) Two types of partnerships, general and limited, provide advantages...
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...Dear John Owner, Congratulations on your new business venture, this is both an exciting and thrilling time for you and I will be more than happy to assist with your questions regarding preparing your business plan. There are several business structures that may be beneficial for your business depending upon what would be your comfort level with risk. In your letter you describe that you are uncertain about financing and the possibility of partnering with someone. Below I will describe the different business legal structures and how each one would affect you and your business in addition to the tax repercussions of each. Firstly, there are a number of legal bodies that can be used to operate a business. The most basic form is called Sole Proprietorship. As its name describes it, the business is solely owned by one owner which in this case would be you. This is a simple legal designation which allows you to have total control over the responsibilities and gains from the business; it gives you the power to make any changes or business decisions without relying on others. In addition, all business responsibilities are also tied to the same individual including all the risk that comes from being the responsible party for the business. The means that at any point if someone decided to sue your company for whatever reason you will be personally liable, including all personal assets and potential damages to personal credit as well. For tax purposed these can be managed in congruence...
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...Business Structure Basics With this basic guide, you'll be able to select the structure that suits your business best. VIEW COMMENTS (0) How To Business Structures Starting A Business Startup Basics 30 Days ENTREPRENEUR STAFF ENTREPRENEUR STAFF Of all the decisions you make when starting a business, probably the most important one relating to taxes is the type of legal structure you select for your company. Not only will this decision have an impact on how much you pay in taxes, but it will affect the amount of paperwork your business is required to do, the personal liability you face and your ability to raise money. The most common forms of business are sole proprietorship, partnership, corporation and S corporation. A more recent development to these forms of business is the limited liability company (LLC) and the limited liability partnership (LLP). Because each business form comes with different tax consequences, you will want to make your selection wisely and choose the structure that most closely matches your business's needs. If you decide to start your business as a sole proprietorship but later decide to take on partners, you can reorganize as a partnership or other entity. If you do this, be sure you notify the IRS as well as your state tax agency. Sole Proprietorship The simplest structure is the sole proprietorship, which usually involves just one individual who owns and operates the enterprise. If you intend to work alone, this...
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...Business Structures LaShondra Dyer BUS311: Business Law I Instructor: Peter McCann April 13, 2016 Selecting a business structure comes with a number of variables. Are you going into business alone? If so, how will you fund it and run it? Will you join forces with others to build a business? If so, what agreements need to be made, for the business to run effectively and efficiently? I have spent over a decade in the nightclub industry in various positions. I started as a waitress, became a bartender, moved up to management, and now I am a club owner. The decision to become an owner was not made overnight, but by having the dreams of becoming a successful entrepreneur by watching those who owned the clubs that I had previously worked. I did not have all of the funds necessary to go into business alone so; I teamed up with another individual that I worked with, and we created a business plan, and now we are in a partnership. Throughout this paper, I will discuss the following business structures: sole proprietorship, LLC, a corporation, and partnership as well as give an analysis of each. I will also discuss my partnership in the nightclub industry and explain why it was the best organizational option for me. Even though the liability of the partners for the debts of the business is unlimited, a partnership may benefit from the combination of complementary skills of two or more people because with more than one owner, the ability to raise funds may be increased...
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...Business Structures Marlana Sisson August 10, 2014 University of Phoenix James Ciaramella FIN/571 When beginning a business, it is extremely important that the owners of the business decide the organizational form that will be beneficial to maximize the value of the firm. The owners must consider the size of the business, the taxation of the business, the liability of the owners and the ability to raise capital to finance the business (Parrino, Kidwell & Bates, 2012). The owners will then choose one of the 3 different forms: sole proprietorship, partnership or corporation. Sole Proprietorship Sole proprietorships are businesses that are owned by a single person. A sole proprietorship is the easiest to form and the most common form of business. One advantage of this type of business structure is that it is quite simple and easy to start and launch. Another advantage is that the owner has complete control over the business and fairly easy tax preparation. Sole proprietorships have no hard regulation regarding registration and permission. One major disadvantage of a sole proprietorship is the unlimited personal liability of the owner. The owner is entitled to all of the profits, but is also liable for any debts or losses. A final disadvantage of a sole proprietorship is that it is very difficult to raise capital to finance the company’s operations (Parrino et al, 2012). Partnerships Partnerships are very similar to that of sole proprietorships except that...
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...Business Structure Advice Sandra Martinez FIN/571 October 8, 2015 Mike Flores Business Structure Advice Business Structure Advice FIN/571 October 8, 2015 From: Sandra Martinez To: John, Owner Subject: Advice in starting your business John, in response to your request, for business structure advice, I believe the following business advice will be extremely helpful to lead you to the best decision. I would advice to develop steps to a business plan. First, write out a business plan. The business plan is to structure a successful business, which will outline and define the goals and guidelines of how to accomplish and structure those goals. A business plan also will help to assist owners with organizing thoughts, developing career ideas and how to lead a business. First and foremost, you must know which business structure and option there are; these options will include sole proprietorship, partnership and corporation. A partnership could be general limited, associated with two or more people as business partners and a corporation could be general or a subchapter S-Corporation. Each of these structures has their advantages and disadvantages and differences in tax consequences. I strongly suggest you review and choose the efficient and effectiveness that best fits your business structure or service needs. The following will include different types of business structures. A sole proprietorship is the best structure for those business owners starting...
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...Business Advice !1 Business Advice Business Advice Mr. Owner, you are off to an excellent start. It is pivotal for business owners to compare options to discover which business structure would be most suitable for their needs. Because you are undecided how to finance and whether you will have partners, I compiled a list of the advantages and disadvantages of each business structure for your review. Sole Proprietorship If you decide that you want full control of the business, a sole proprietorship could be the best option. In this structure, you would be the decision maker; therefore, the way in which your business operates will be up to you. Additionally, since you are undecided about financing, you will be pleased to discover that a sole proprietorship is the least expensive option and has a very simple formation process (“Corporate Business Structures”, 2011). In reference to your question about taxes, a sole proprietorship does not have any specific business taxes; instead, as the own- er, you would pay taxes on your income as part of your personal income tax payments (“Advan- tages and Disadvantages of Sole Proprietorships”, 2007). Before you decide upon a sole propri- etorship, you should be aware of the negative aspects. Because there is no liability protection, you would be held personally liable for the business’s debts and any liabilities that result from your employee’s actions (“Advantages and Disadvantages of Sole Proprietorships”, 2007). Ad- ditionally, the...
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...Business Structure Belinda Sintim FIN 571 March 14, 2016 David Johnson Business Structure When one decides or proposes to start a business, they must decide on the type of business structure that would best benefit the needs of their business. Each business structure has its advantages and disadvantages. The three different business structures are Sole Proprietorship, Partnership and Corporation. Each structure has different set of rules and regulations that the owner or owners have to abide by. The Sole Proprietorship has the least amount of regulations from federal state or local government that owners would have to follow (Carter, 2016). This form of business structure has one owner. It is considerably the easiest structure to partake in, because there are not any documents needed to legally start Sole Proprietorship. Many people favor the fact that this structure gives the owner a great deal of control over the business. The biggest disadvantage is the fact that the Sole Proprietorship does not have any protection for the business owner in liability of the company’s debts and obligations. Which means that the owner’s personal assets are not protected when the company is liable for any type charges or debt. (Carter, 2016) A Partnership is structured with two or more people who own the business. Unlike the Sole Proprietorship the Partnership allows the burden or the responsibility to be shared among all the owners not just one. Just as sharing the duties...
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...Business Structures Steve Leon FIN 571 February 23, 2015 Arnold Harvey Business Structures When starting a business one must answer a simple question. What type of organization or business does he or she wants to establish. Depending on what form of organization or business is chosen different regulations as far as administration, hiring and firing as well as budgeting and taxes will apply. The most common forms of business are the sole proprietorship, partnership, corporation, and S corporation. A Limited Liability Company (LLC) is a relatively new business structure allowed by state statute. A sole proprietor is someone who owns an unincorporated business by himself or herself. However, if you are the sole member of a domestic limited liability company (LLC), you are not a sole proprietor if you elect to treat the LLC as a corporation. A partnership is the relationship existing between two or more persons who join to carry on a trade or business. Each person contributes money, property, labor or skill, and expects to share in the profits and losses of the business ("Irs", 2014). A partnership must file an annual information return to report the income, deductions, gains, losses, etc., from its operations, but it does not pay income tax. Instead, it "passes through" any profits or losses to its partners. Each partner includes his or her share of the partnership's income or loss on his or her tax return ("Irs", 2014). In forming a corporation, prospective shareholders...
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...Business Structures Business Structures Entrepreneurs should focus on the determining the best business structures based on their needs and the needs of their businesses (Cody, 2007). Entrepreneurs will work comfortably and obtain enough income upon choosing business structures that fulfill their needs accurately. The video shows different business structures from which business entrepreneurs can choose the most suitable structure. The business structures include Sole Proprietorship, Limited Liability Companies, General Partnerships, S Corporations, and Limited Partnerships. This discussion will consider an explanation of how the business structures might and might not be advantageous. Sole Proprietorship is an advantageous business structure because entrepreneurs can start easily without incurring a high financial cost. In addition, entrepreneurs do not require operating documents or annual reports (Cody, 2007). Therefore, Sole Proprietorship will encourage entrepreneurs to start a business by investing a little amount of money. On the other hand, sole proprietorship might not be advantageous because business owners do not have liability protection. Entrepreneurs are liable for any problem that takes place. Sole proprietors pay federal and state taxes on loss and profit (Cody, 2007). Therefore, some individuals may not choose Sole Proprietorship as an appropriate business structure because of the disadvantages. General Partnership...
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...Business Structures Ted Harris FIN/571 - Corporate Finance March 5, 2015 Robert Trujillo Business Structures Starting a business comes with many of important decisions. One of the first and most important decisions is how the owner will structure their business. The structure depends on if the business will have partners or employees, amount of control over the business, the amount of liability the business owner wants to take on, as well as other factors. Each business structure along with their advantages and disadvantages will be discussed below. The first business structure is a Sole Proprietorship. This business structure is owned by one person, and 75 percent of all businesses in the United States are of this structure (Wiley, Kidwell, & Bates, 2012, pg 6). Sole Proprietorship’s are an easy and inexpensive way to start a business. Business owners choosing this structure generally have limited funds and want absolute authority of business affairs. One major disadvantage is that there is no separation between business and personal affairs. The business owner also has unlimited liability Partnerships are another form of business structures where two or more people have joined together to run a business (Wiley, Kidwell, & Bates, 2012, pg 7). There are two different types of partnerships: a general partnership and a limited partnership. Like a sole proprietorship, the general partnership has the same advantages and disadvantages. Each partner has unlimited...
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...Business Structures Every business is different and when individuals want to start a business, the owners think of what forms would be most advantageous for them. The different business structures are not simple and all serve a purpose (Parrino, R. 2012). The structures of business structures are, Sole Proprietorship, Partnership, and Corporation (Parrino, R. 2012). These business types all have different governmental requirements (DeFrancesco, R. 2006). The different necessities are their tax requirements, legal issues, personal findings and concerns as well as their financial obligations (Corporate Business Structures, 2011). This paper shows the structures and overview of business. Sole Proprietorship Sole proprietorship is generally a business owned by one individual. This person owns the business and is responsible for the debts. This means that the “sole proprietorship is an important business and the economy n the United States, but accounts for a small amount of collected aggregate business receipts (DeFrancesco, R. 2006). The drawback in with this business is raising money, and banks giving credit (DeFrancesco, R. 2006). Partnership A partnership is owned by several people. Partnerships have general partnerships and limited partnerships. This means that the partners manage the company and responsibilities with general partnerships and with limited partnership has both their limited and general and partners. With partnerships one of the major concerns...
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