Business Structures
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- Date Submitted: 11/10/2014 10:39 AM
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Business Structures
Starting a business can be an exciting adventure for anyone aspiring to be an entrepreneur. In the business world, there are several types of businesses that a person can start. The following paragraphs will highlight information presented in a learning video that identified the different types of business structures that can be used when starting a business.
Sole Proprietor
In this structure, the business is unincorporated and one person can be the sole owner of the business. This is advantageous because it allows one person to manage and make decisions for the entire business. Another advantage is the cost that is associated with starting a sole proprietorship. Licensing compliance is minimal and cost associated with compliance is very inexpensive. This business structure is one of the easiest ways to engage in a business. This structure is inexpensive and does not require a large amount of capital to get started. One of the main disadvantages of this structure is that an owner can be subjected to unlimited personal liability for the debts, losses, and liabilities of the business.
Partnership
There are two types of partnerships. General partnership occurs when a written agreement occurs between two or more people. Partners share the assets, profits, liabilities and management of the entire business. One advantage of this structure is the way taxes are reported to the federal government. Partners benefit from this pass thru tax treatment. This treatment does not require taxation of the
* Owners are subject to unlimited personal liability for the debts, losses and liabilities of the business.
* Owners cannot raise capital by selling an interest in the business.
* Sole proprietorships rarely survive the death or incapacity of their owners and so do not retain value.
Starting a business can be an exciting adventure for anyone aspiring to be an entrepreneur. In the business world, there are several types of businesses that a person can start. The following paragraphs will highlight information presented in a learning video that identified the different types of business structures that can be used when starting a business.
Sole Proprietor
In this structure, the business is unincorporated and one person can be the sole owner of the business. This is advantageous because it allows one person to manage and make decisions for the entire business. Another advantage is the cost that is associated with starting a sole proprietorship. Licensing compliance is minimal and cost associated with compliance is very inexpensive. This business structure is one of the easiest ways to engage in a business. This structure is inexpensive and does not require a large amount of capital to get started. One of the main disadvantages of this structure is that an owner can be subjected to unlimited personal liability for the debts, losses, and liabilities of the business.
Partnership
There are two types of partnerships. General partnership occurs when a written agreement occurs between two or more people. Partners share the assets, profits, liabilities and management of the entire business. One advantage of this structure is the way taxes are reported to the federal government. Partners benefit from this pass thru tax treatment. This treatment does not require taxation of the
* Owners are subject to unlimited personal liability for the debts, losses and liabilities of the business.
* Owners cannot raise capital by selling an interest in the business.
* Sole proprietorships rarely survive the death or incapacity of their owners and so do not retain value.