Acc 220 Week 1

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Explain the differences between a proprietorship, a partnership, and a corporation in 200 to 300 words. Why would an entrepreneur want to choose one over the other? If you were starting a new business, which would you choose? Explain why. Proprietorship is also known as the sole trader. This when a type of business entity that is owned and run by one individual and in which there is no legal distinction between the owner and the business. All the profits to the owner and it has unlimited responsibility for all losses and debts. The business assets are owned by the proprietor. The debt of the business is also the proprietor responsibility. There are advantages as well as disadvantages is a proprietorship. Sole proprietorship has the least government rules and regulations affecting it. the ability to raise capital either privately or publicly, you can limit the personal liability of managers and officers, and another bonus would be able to limit the risk to investors. The disadvantage is it is a little more difficult to raise capital and that is because investors have less peace of mind and other types of business entities have more documentation. An unlimited liability where the owner’s personal assets can be taken away is one of the main disadvantages. A partnership is an arrangement where parties agree to cooperate to advance their mutual interest. 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 experts to share in the profits and losses of the business. When it comes to taxes in a partnership, each partner includes his or her share of the partnership’s income or loss on their own tax return. Some advantages are; they are relatively easy to establish, the ability to raise funds may be increased (contributing more funds and the borrowing capacity may be greater), there’s a wider pool of knowledge, skills and contacts and the moral support...
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