Types of Business Forms
How to choose the right type of Business form
LAW/531
How to choose the right type of Business form
Today’s business world has many choices for the new entrepreneur to decide from when forming a business. The choices are sole proprietorship, partnership, limited liability partnership, a limited liability company, a S corporation, a franchise, and a corporate form. Development of scenarios portraying each of these forms of business will aid the entrepreneur with deciding which form will be the best choice for the business.
Sole Proprietorship
“Sole proprietorship is the simplest form of business organization. The owner of the business the sole proprietor is the business” (Cheeseman, 2010 p.530) advantages to this form of business is that it is easy to form and does not cost much in regard to monetary allocation. The owner makes all the decisions and owns all of the business and its profits.
Samantha is a young woman who wants to own her own business. Sam’s Dragon Salts, a bath salt business. Sam operates the business out of her home, Sam is the owner of the business, and because she is the only owner the business is run as a sole proprietor that is, “:a business owned by only one person and operated for his or her profit” (Kauffman Foundation, 2007) . Sole proprietorship is the easiest to own and maintain requiring little to no paperwork or approvals to begin operation. Sam’s bath salt business has done well and orders are coming in faster then she can fill so Sam now has advanced her business to the point where she needs to take on a partner. Sam starts researching the different types of partnership forms available to assist her with taking her business to the next step.
Partnership
“A partnership forms when two or more entities join together for a common business purpose. Two or more people, a person and a corporation, two corporations, or even two partnerships may form a partnership.” (Kaufman foundation, 2007 p.2). Sam is forming a
LAW/531
How to choose the right type of Business form
Today’s business world has many choices for the new entrepreneur to decide from when forming a business. The choices are sole proprietorship, partnership, limited liability partnership, a limited liability company, a S corporation, a franchise, and a corporate form. Development of scenarios portraying each of these forms of business will aid the entrepreneur with deciding which form will be the best choice for the business.
Sole Proprietorship
“Sole proprietorship is the simplest form of business organization. The owner of the business the sole proprietor is the business” (Cheeseman, 2010 p.530) advantages to this form of business is that it is easy to form and does not cost much in regard to monetary allocation. The owner makes all the decisions and owns all of the business and its profits.
Samantha is a young woman who wants to own her own business. Sam’s Dragon Salts, a bath salt business. Sam operates the business out of her home, Sam is the owner of the business, and because she is the only owner the business is run as a sole proprietor that is, “:a business owned by only one person and operated for his or her profit” (Kauffman Foundation, 2007) . Sole proprietorship is the easiest to own and maintain requiring little to no paperwork or approvals to begin operation. Sam’s bath salt business has done well and orders are coming in faster then she can fill so Sam now has advanced her business to the point where she needs to take on a partner. Sam starts researching the different types of partnership forms available to assist her with taking her business to the next step.
Partnership
“A partnership forms when two or more entities join together for a common business purpose. Two or more people, a person and a corporation, two corporations, or even two partnerships may form a partnership.” (Kaufman foundation, 2007 p.2). Sam is forming a
References: Cheeseman, H. R. (2010). Business Law: Legal Environment, Online Commerce, Business Ethics, and International Issues (seventh Ed.). Upper Saddle River, NJ: Prentice Hall. Kauffman Foundation, (2007). Six Forms of Doing Business. Retrieved from http://www.entrepreneurship.org