When starting and owning a business, you need to understand the importance of how you will choose to organize your business from different types of business structures such as sole proprietorship, partnership and corporation. This week you will see a brief explanation of each as well as advantages and disadvantage of each of the business structures. Personal Business Structure
Sole proprietorships are the simplest of all legal structures but they also lack many of the legal and financial protections of other business. The advantages of a sole proprietor are that owners not pay any taxes that are separate from the company, the cost is very inexpensive with minimum fees and funds, and an owner has complete authority on when to transfer or sell the business (University of Phoenix, 2011). The disadvantage is that you are personally reliable for everything such as debts. Furthermore, investors do want to invest into someone that is a sole proprietorship. There are two different types of partnerships, General Partnership and Limited Partnership. A General Partnership is a written agreement between two or more people. Each partner contributes money, property, labor, or special skills and each partner shares in the profits and losses from the business. The advantages to having a partnership are that General Liability advantages are that it has fewer regulations and are under less government supervision than corporations, they are taxed like a sole proprietorship (Griffin, 2015). Each partner has to include her business income on their personal tax return and they can deduct business losses on their individual return as well (Griffin, 2015). The disadvantages however are that a General partnership is limited to the number of owners and that the owners must record the income, profits, and losses on their personal income taxes. A Limited Partnership there is one or more limited partners. It is a partnership in which only one partner is required to...
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