Business Structure

In: Business and Management

Submitted By antonioroel
Words 437
Pages 2
Business Structure
FIN 571
November-Nineteen, 2013

Business Structures
As seen on the video there are different kind of business structures, each one differentiates from one to other giving options to people that want to be business entrepreneurs. There are Sole proprietorship, general partnerships (gp), limited partnerships (lp), limited liability companies (llc), s corporations and c corporations. Each one of them serves a purpose depending on your needs and the needs of your business.
A Sole proprietorship is easy to start and has no costs to begin as this like some others; also there are no annual reports required or operating documents. On the other side owner don’t have any liability protection, it means you are liable for everything, and they do pay state and federal taxes on profit and loss.
General partnership formation requirements are simple and low on cost. All partners have joint and several liabilities. There are no annual reports required and they are not taxed at a federal or state level. The problem on being a general partnership are the liabilities while the tax breaks are the main reason as to why be part of one.
Limited Partnership formation requirements maybe complex or simple and the costs are reasonable. There are no annual reports nor get you taxed on a state or federal level for being in the LP. Assets are protected and you are not obligated for any debts or obligations. But the legal formalities and paper work is much more extensive.
Limited liability companies’ formation requirements are complex and they are much expensive. Good thing is that members have limited liability but there is much more paper work involved as well as taxation plans that come along. According to "Legal Zoom" (2008), “Probably the biggest disadvantage to forming an LLP is that it is available only for certain occupations, such as attorneys or…...

Similar Documents

Business Structures

...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......

Words: 997 - Pages: 4

Business Structures

...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......

Words: 741 - Pages: 3

Business Structures

...Business Structures Fin/571 Business Structures This week we learned about the different business structures to consider when establishing a business. It is important to note the advantages and disadvantages of each business structure when planning a business. The main business structures include sole proprietorship, partnership, and corporation. Sole Proprietorship Sole proprietorship is a business owned by one person. It is the easiest, least expensive, and least regulated business structure to start. The advantage of a sole proprietor include not having to share the profits or control of business decisions with anyone else. However, the disadvantage is that sole proprietors have unlimited personal liability for the business debts and obligations. Partnership. A partnership business agreement legally formed with two or more owners. The agreement specifies the amount of capital each partner contributes, division of profits, the role of each partner, decision-making process, and transfer of ownership in specified events. The advantage of more than one owner is an increase in capital or borrowing capacity, added knowledge and skills from each of the partners. There are two types of partnerships general and limited. General Partnership-a disadvantage is unlimited liability of all the general partners, partners who manage the daily activities of the business, regardless of the amount of capital each contributed. Limited Partnership- partners, who are......

Words: 565 - Pages: 3

Business Structure

...Business Structures Robin Duuring FIN/571 July 28, 2014 Zhenhu Jin Business Structures There are several business structures to consider when looking at starting a business. Each of structures has advantages and disadvantages. By doing, in-depth research on each structure will allow for the best decision on a business structure. A careful consideration of the organizational structures: Sole proprietorship, Partnership, Corporation, S Corporation and Limited liability company (LLC) are advantageous in helping a business to succeed. Sole Proprietorship Sole proprietorship is the most common business structure. This type of structure is owned and operated by one proprietor. An advantage is that sole proprietorship is a simpler and inexpensive structure to start compared to other business structures. This type of structure is considered a "pass-through" tax entity, where all of the revenues and costs pass through the business to the proprietors, who report their portion of the revenues (or deduct their portion of the costs) on their individual income tax returns (Gaff & Fryzel, 2012). Some more advantages of a sole proprietorship are independence, autonomy, one-decision-maker and an effective management structure ("Sole Proprietorship," 2007). A disadvantage of sole proprietorship is a business and proprietor is one and the same with unlimited personal liability (Gaff & Fryzel, 2012). All pressure of successes and failures is the responsibility of the proprietor.......

Words: 713 - Pages: 3

Business Structure

...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...

Words: 653 - Pages: 3

Business Structure

...Business Structure FIN 571 Professor Charles Marchand August 25, 2014 Each business structure has it advantages and disadvantages, however each one structure may or may not be advantageous. An advantageous structure is a structure that is beneficial and has favorable circumstances. In choosing business structure, one must choose the structure that best fits their business plans. There are three types of business structure, which consists of partnership, sole proprietorship, and corporation. A corporation is considered to be a standalone entity. In a standalone entity, no one person is liable for the assets or debts of the company, and separates tax liabilities. Another beneficial advantage is since the corporation is its own entity the corporation does not end once the owner is no longer there but continues on through shareholder. A disadvantage of corporations is corporations have to pay taxes twice which occurs during when the corporation turns a profit and pays dividend to shareholders. A sole proprietorship is the most inexpensive way to start a business. Within this structure, the owner has complete control over operations and responsible for business decision-making. Far as taxes, no specific business taxes are paid, but the owner pays taxes on the income of the business as part of their personal taxes. The major disadvantage of sole proprietorship is the business owner is personally responsible for all obligations and debts of the business. If the......

Words: 384 - Pages: 2

Business Structures

...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......

Words: 704 - Pages: 3

Business Structure

...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......

Words: 805 - Pages: 4

Business Structures

...Business Structures Myriah Shanks ACC/537 July 4, 2011 George Bray Business Structures Starting a new business can be an exciting yet challenging time. One of the important decisions new business owners have to make is, which business structure to use. The three business structures new owners typically chose from are sole proprietorship, partnership, and corporation. This paper will not cover a fourth type of business structure the limited liability company (LLC). Choosing the structure that fits best will help any business achieve its goals and run smoothly. A sole proprietorship is a business owned by one individual. Spouses starting a family business should be aware that only one of them can be considered the sole proprietor of the business, so this should be taken into consideration when choosing a business structure. Transferring ownership of a sole proprietorship can be very difficult but sole proprietorships are easy to set up and maintain. This type of business is totally owner controlled. For tax purposes there is no distinction between the owner as an individual and the business. This means the owner has total liability for the business. Taxes for the business are paid through the owners personal taxes so there is a tax advantage to a sole proprietorship because the total taxes are generally tax total tax paid is lower. The next type of business structure is partnership, which is a business owned by two or more people. Like a sole proprietorship it......

Words: 550 - Pages: 3

Business Structure

...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......

Words: 715 - Pages: 3

Business Structures

...Business Structures Tasha Minnett FIN/571 September 29, 2015 Walter Corrigan Business Structures Opening a business requires a lot of thought and steps to take in making the business succeed. One of the first steps in opening a business is deciding what type of business structure will be best for the type of business that is being opened. There are five different types of business structures. Sole Proprietorship This type of business structure is owned solely by the owner and no one else. Sole proprietorships are also unincorporated. This means that the owner is at total liability for their business. Being unincorporated also means that the owner is taxed; the business is not taxed separately. Although one of the up sides to this type of business structure is that the business is run completely the way the owner wants to run it, they only have to answer to government and state regulations. Another upside is that it is the cheapest business structure to form. Partnerships A partnership is when two or more people come together to own a business. This type of business is also unincorporated which again means that the owners are at total liability. The taxation for the business is also done through the owners; each owner includes their share of the business’ gains or losses in their tax returns. Having partners has its pros as there are more people to share in the liability and more people to help make the big decisions with. Partners also bring a balance in ideas,...

Words: 698 - Pages: 3

Business Structures

...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......

Words: 545 - Pages: 3

Business Structure

...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......

Words: 581 - Pages: 3

Business Structure

...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......

Words: 2632 - Pages: 11

Business Structures

...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,......

Words: 767 - Pages: 4