Business Law 531

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Legal Forms of Business
James McCeavey
Business Law 5331
October 22, 2012
Richard Simon

Legal Forms of Business
This paper will cover the different forms of business and who would benefit from that type of business. The types of business discussed will be sole proprietorship, partnership, limited liability partnership, Limited Liability Company (LLC), S corporation, franchise, and corporate form. Justification will be given why the type of company would benefit from each form of business. The sole proprietorship type of business has advantages for entrepreneurs starting out to earn an income. An entrepreneur starting a sole proprietorship business owns the entire business and cost very little to start. The owner also makes all management decisions with no approvals from anyone else and receives all profits. The business is easily transferred and sold if the proprietor needs to sell for any reason. The disadvantages of this type include funding and legal responsibility. The only funding an owner can receive comes from the owner and what loans he or she can get from a lender. The sole proprietor is also legally responsible all business contracts and unprotected against law suits (Cheeseman, 2010). An entrepreneur without much capital starting out would be a candidate for sole proprietorship. This would allow the owner to set up his business and get controls set while he or she is getting established in the business world. A group of people may choose to go into business with each other. This venture is called a partnership and requires four elements: two or more persons, carrying on a business, work as co-owners, and the business works for profit. Partnerships share in the business profits, but further evidence is the partners have an agreement to share in profits and losses and rights to participate in management. This type of business if free to determine the terms between the persons of the partnership and businesses lasting more than one...
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