Business Forms: Proprietorships, Partnerships, And Corporations

1684 words - 7 pages

Starting a new business is the dream of entrepreneurs all across the United States. Prior to starting any type of business, potential business owners must work out a great number of details. Among all of the decisions that must be made, the most significant choice a business owner must make is selecting the legal structure of the business. A business owner's level of liability and control is directly related to the business structure and these factors vary greatly depending upon which form is selected. In order to choose the most suitable form for any business venture a person must first understand the key differences and characteristics of each business structure.Throughout the years a number of different business structures have been developed which have been designed to meet the wide range of needs of businesses and business owners. Although several other business forms exist, the three primary business structures which are used in the United States are sole proprietorships, partnerships, and corporations. The main differences between these three business forms are the tax accounting methods, the amount of liability which is imposed on the business owner(s), the number of owners which are involved with the company, and the amount of control that is given to the owner(s).A sole proprietorship, which is defined by having a single owner, is "the most common form of business in the United States" (Mallor, 893). The only requirement for a business to be a sole proprietorship is that it has only one owner. Compared to other business forms, this structure is the easiest and most inexpensive type to form. Sole proprietorships do not require any specific legal formalities, nor do they require any special fees. They are formed simply by default anytime an individual starts a business without specifying an alternate business form.According to the law, sole proprietorships are not considered to be separate legal entities. The business itself has no individual existence, it is "merely an extension of its only owner, the sole proprietor" (Mallor, 892). A great amount of liability is assumed anytime a person starts a business as a sole proprietorship. All of the debts and obligations incurred by the business are considered to be the debts and obligations of the owner himself. "If the assets of the business are insufficient to pay the claims of creditors, the creditors may require the sole proprietor to pay the claims using his individual, nonbusiness assets such as money from his bank account and the proceeds from the sale of his house" (Mallor, 893).Although the liability associated with sole proprietorships can be substantial, many business owners find that the benefits are worth the risk. A sole proprietorship provides the business owner with a great amount of control that is unlike any other business form. Along with having complete and total control over management decisions, the owner of a sole proprietorship also gets the benefit of earning all the...

Find Another Essay On Business Forms: Proprietorships, Partnerships, and Corporations

Solutions for Corporation Finance RWJJ 3rd edition Chap 1

894 words - 4 pages CHAPTER 1INTRODUCTION TO CORPORATE FINANCEAnswers to Concept Questions1. The three basic forms are sole proprietorships, partnerships, and corporations. Some disadvantages of sole proprietorships and partnerships are: unlimited liability, limited life, difficulty in transferring ownership, and hard to raise capital funds. Some advantages are: simpler, less regulation, the owners are also the managers, and sometimes personal tax rates are better...

Principles of Management Essay

3280 words - 13 pages In the theory of management, organization has two principal aspects. One relates to the establishment of so-called lines of responsibility, drawn usually in the form of an organization chart that designates the executives of the business, from the president to the foreperson or department head, and specifies the functions for which they are responsible. The other principal aspect relates to the development of a staff of qualified executives.It is...

America

679 words - 3 pages Chapter 9 : Business Firms in the Economy Proprietorships , Partnerships and Corporations are all forms of business organizations are what makes business function in the economy. Proprietorship is a form of business in which there is only one owner ,therefore the money that the business makes is the owner's money , however the disadvantage of proprietorship is the concept of unlimited liability which is ,that the owner's possessions can be used...

Entrepreneurship

1556 words - 6 pages Describe the term Entrepreneurship and the challenges of starting a small business Entrepreneurship is the dream of a lifetime for most individuals. The idea of being in control on one's financial future by establishing, owning, and operating their own business has driven most individuals in the direction of Sole Proprietorships. Most plunge in looking at the advantage and over looking the disadvantage and challenges of Sole Proprietorships. ...

Types of Businesses in America

1339 words - 5 pages Types of Businesses in America American society has always been optimistic towards their future. The American nation is a capitalistic country. Many individuals are influenced to start up their own businesses with their own ideas. The government helps and regulates all business. There are three types of businesses sole proprietorships, partnerships and corporations. A sole proprietorship would be my best choice to start up my own business. ...

Agency Law and Business Entities-

2434 words - 10 pages Franchise, sole proprietorship or corporation: which do I choose? There are many business entities to choose from when starting and operating a business. How does one choose the best fit for their goals and the goals of their new business? Well to answer these questions we must discuss the various business entities as well as laws that govern many aspects of business interactions with individuals and specifically with other businesses. These laws...

Corporate Characteristics Proposal

2120 words - 8 pages IntroductionAs the CEO, you are aware the Team A, consisting of Robert Azevedo, Ross Amaral, and Susan Ro have been hired as consultants for a start-up business venture. The primary tasks set for Team A include a complete analysis of corporate characteristics. As part of the analysis and proposal, Team A will address the following matters. First, Team A will describe several different types of business that may serve as the new business venture....

week one indiviual assignment

1070 words - 4 pages Page | PAGE \* MERGEFORMAT 7 Limited liability company and partnership PAPER Limited Liability Company and Partnership PaperMichelle L. WeidmanFIN/419October 13, 2014Maria JohnsonLimited Liability Company and Partnership Paper"Twenty years from now you will be more disappointed by the things you did not do than by the ones you did do. So throw off the bowlines. Sail from the safe harbor. Catch the trade winds in your sails. Explore. Dream....

Introduction to business

4056 words - 16 pages - -Business plays a major role within our society. It is a creative and competitive activity that continuously contributes to the shaping of our society. By satisfying the needs and wants people cannot satisfy themselves, businesses improve the quality of life for people and create a higher standard of living. It is a way for individuals to provide goods and services to consumers, and at the same time, produce a profit for themselves. Businesses...

Small Business

1881 words - 8 pages Numerous large businesses that are operating today were once started as small businesses. A new business is established to create a good or service that no other businesses have ever created or simply a product of higher quality than existing products, with the purpose of meeting customers’ needs and earning profits. Due to the technological advances at the present time, starting and operating a new business is less laborious. Nevertheless,...

make a wish foundation

1674 words - 7 pages There is an array of things that are assessed in starting a successful business. When viewing the success of Dale Northrup who decided to open the Percy Inn in Portland, Maine, after being a critic and editor for hotels and cruise ships all over the world, it becomes very apparent that a great deal of work goes into starting a successful business. A business owner must first determine the reasons in which they want to start a business. The owner...

Similar Essays

Q1: Full Supply Chain (Sc) For Computer Products Q2: Trends Terms Of Wealth And Opportunity Of The People Q3: Cradle To Cradle Q4: The Key Ingredients Of Socially Sustainable Business Q5: “...

2716 words - 11 pages Business for Social Sustainability Q1: FULL supply chain (SC) for computer products The people who are involved at each part of the supply chain Raw Material Extraction Several raw materials go into the components for a computer. Examples are lead, gold, silver, coltan (columbo-tantalite), cadmium, aluminium, zinc and copper. These materials are extracted in developing countries that have the...

Limited Liability Corporation And Limited Liability Partnership

1003 words - 4 pages When starting a business one is required to make some important decisions and complete several steps. As part of the overall plan, one will need to decide on a location, business structure, and lastly, acquire the necessary licenses and permits. Common forms of business structures include sole proprietorships, limited liability corporations (LLC's), limited liability partnerships (LLP's), public and privately held corporations, and franchises....

Limited Liability Corporation And Limited Liability Partnership

1120 words - 4 pages Running head: LLC and LLP 1 LLC and LLP PAGE \* Arabic \* MERGEFORMAT 2 Limited Liability Corporation and Limited Liability Partnership PaperFIN/419: Finance for Decision MakersLimited Liability Corporation and Limited Liability Partnership PaperStarting a business requires many decisions, one of which is the form of business organization that will be established. Common legal forms of business organizations include sole proprietorships,...

Limited Liability Corportations And Partnerships Essay

861 words - 3 pages PAGE PAGE 5 Limited Liability Limited Liability Corporations and PartnershipsLaura GabbardUniversity of PhoenixFIN/419 Finance for Decision MakingJennifer L. StappMay 19, 2008Limited Liability Corporations and PartnershipsStarting a new business requires many decisions, and much planning. One of the earliest and most important decisions is the form of the business, or the type of business entity. Common forms of business entities include sole...