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Types of Businesses

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Betty Wilson, a mature Christian, is thinking of opening a Christian Coffee House in Belmont, NC. Her husband John is open to making a contribution of capital to the business, but he has no interest in participating in its operation or management.
Her sister Alice, is a new Christian, and has informed Betty that she’s been looking for an excuse to get out of the house and that she would love to be a part of the business. Alice’s husband, a non-Christian, opposes her involvement and told her that he expects her to remain a stay-at-home mom to their daughters, Ally and Lisa, ages 13 and 15. Betty’s neighbor Erma, a non-Christian, has also expressed an interest in participating in the business as a way to earn some extra income.
As a consultant, I will address the pluses and minuses of the following business forms so that Betty might adopt a business structure that is the best fit for her success.
“A Sole Proprietorship, is a business owned by one person with no formal legal structure.
The advantage is simple. Just start your business; there's no additional paperwork. You don't file corporate income tax; just file a Schedule "C" with your personal income taxes. The disadvantages are you have no personal liability protection. If your business is sued, you could lose everything you own, and in some cases, your spouse could lose his or her assets, too.
A Partnership is a business with more than one owner who actively engages in the management of the company. The advantages are no required legal forms, (although you'd be well advised to draw up a partnership agreement). There is no double taxation, the profits pass through to the partners. The disadvantages are where each partner has unlimited personal liability, even for actions taken by other partners. Be warned, if you go into business with others, you've got a partnership in the eyes of the law whether or not

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