Owning a business is a can be very exhilarating experience. It can be culmination of a life long dream or maybe you have worked in an industry where you have a plethora of experience. You feel that instead of letting a company benefit from all of your expertise,why not be your own boss. Not to mention the potential of having an extremely profitable and successful business to boot. While being your own boss has a vast amount of advantages it also comes with an equal amount of disadvantages. In this paper and the Memorandum to follow I will be discussing the 6 different forms of business organizations as well as the advantages and disadvantages of each form of business . I will be discussing ...view middle of the document...
Income Taxes: Income tax is filed the same way as they file taxes their personal taxes since the business and the business owner are the same.
Longevity and Continuity: the sole proprietorship lasts as long the owner lasts. Once the business owner dies they cannot leave the business to any surviving family members.The business owner also cannot sell the business to anyone interested in owning his business. The business owner is allowed to sell anything within the business, such as client lists or any unsold goods. Longevity of the business is also affected by the amount of money a business owner has access to via loans or their own savings. In order to obtain a loan the owner would have to have a stellar credit rating since the loan that they obtain for the business is a personal loan. One advantage of not being able to pass on a business after an owner dies is that it can avoid any family discourse by one family member being chosen to carry on the business versus another family member .
Control: Control over a sole proprietorship is the owners and the owners alone. The owner does not have to answer to partners,a board of directors or shareholders. Any decision made is the owners and the owners alone. The disadvantage is, the consequences of making a bad decision is the owners alone.
Profit Retention: Profit retention in a sole proprietorship is limitless. The business could make the owner very wealthy and enhance the lives of everyone around him. The disadvantage is again the limitless liability.The amount of profit a owner makes can also be equal to the amount of debt that an owner has incurred.
Location: The location of a business can be anywhere. As long as the business owners has all required permits and licensing needed to run a legal business. The business owner can also open another branch in another state. If a business owner does open a business in another state then they will have to make sure that they are following the rules of that state. If for example the type of business that the owner opened in the other state is governed by an agency that requires that the business be audited every year or every three years. The business owner would be solely responsible for keeping accurate records and preparing for an audit.
Convenience or burden (Compliance): The sole proprietorship form of business is the easiest form of business to set up,but it is also the form of business with the most disadvantages; The business cannot be passed on to another person,the owner also cannot sell the business to another person only items used for the business maybe sold or given away.
A general partnership is a business with 2 or more people. It is similar in make up with a sole proprietor business,in that the business and the partners are one and the same. It is also an informal set up,but can also be set up formally with a written agreement or contract.
Liability: The liability for a general partnership is similar to a sole...