The purpose of this paper is to analyze each of the following forms of business: sole proprietorship, general partnership, Limited Liability Partnership (LLP), Limited Liability Company (LLC), S-Corporation, franchise, and C-Corporation and develop a justifiable scenario of the preferred form of business. Business Forms
The sole proprietorship is the simplest form of business. The owner of the business is called the sole proprietor and is the business. The sole proprietorship, while being easy to form and maintain, has one major disadvantage; the owner is legally and personally responsible for the business’s obligations the owner or any employee agree to during the course of employment. A sole proprietor bears the risk of loss of the business. In addition, the sole proprietor has unlimited personal liability. A General Partnership is a voluntary association of two or more persons for carrying on a business as co-owners for profit (Cheeseman, 2010). The rights and duties of a general partnership are normally established in a written partnership agreement however, it is not required by law. General partners are personally liable for the debts and obligations of the partnership (Cheeseman, 2010) and like the sole proprietor, have unlimited personal liability. The income or losses of the partnership pass through to the individual partners personal income tax returns; the partnership itself does not pay federal income taxes. A Limited Liability Company (LLC) is an unincorporated business entity that combines the most favorable attributes of general partnerships, and corporations (Cheeseman, 2010). An LLC may elect to be taxed as a partnership, the owners can manage the business, and the owners have limited liability for debts and obligations of the partnership. Income or losses flow through to the members’ individual income tax return thus avoiding double taxation. Limited Liability Partnerships (LLP) are very similar to LLCs but are limited to...
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