Business Organizations

Topics: Corporation, Business law, Types of companies Pages: 3 (1778 words) Published: October 22, 2014

The Differences of
Business Organizations
Michael Lilly
Western Governors University
Sole Proprietorship: This type of business organization is owned by one person. This person is the manager and makes all decisions regarding day to day operations. Any money earned is considered income of the sole proprietor. Any debt incurred by the business also falls on the shoulders of the proprietor. Some advantages of a sole proprietorship are that the formation of this type of company fairly easy and you have control over any decisions that are made. The sole proprietor also does not have to share the profits. There are certain disadvantages that come along with this type of business organization. One of the most important disadvantages are that you, the sole proprietor, are responsible for any liabilities. Other disadvantages are any endeavors that you embark upon become your financial responsibility and it becomes harder to hire, train, and keep exceptional employees. Liability: This is a disadvantage for this form of business. The sole proprietorship is an extension of its owner. The financial pitfalls of the company falls solely on the owner. If the case of any lawsuits filed against the business, any assets owned by the owner are subject to being seized by the courts. Income Taxes: No taxes are levied directly on the earning of the sole proprietor. The earnings of the proprietor are taxed as personal income. Profit Retention: All profits are owned by the sole proprietor, minus personal taxes. Control: You are in control as the owner of a sole proprietorship. There is no one to answer to and the business is managed in any way you see fit. Longevity or Continuity of the Organization: The longevity of the business depends on its profitability. There is no eternal longevity of the sole proprietor. Death, retirement, or withdrawal from the business means that the company ceases to exist. Convenience or Burden: You are your own boss. This can be...

References: BIBLIOGRAPHY (2014, June 12). Retrieved from http://www.entrepreneur.com/: http://www.entrepreneur.com/encyclopedia/subchapter-s-corporation
http://www.entrepreneur.com/. (2014, June 6). Retrieved from Limited Liability Company: http://www.entrepreneur.com/encyclopedia/limited-liability-company
www.BizFilings.com. (2014, June 12). Retrieved from S Corporate Advantages and Disadvantages: http://www.bizfilings.com/learn/s-corporation-advantages-and-disadvantages.aspx
TO: Wood Manufacturing Owner
FROM: Michael Lilly
DATE: June 12, 2014
SUBJECT: Suggested Corporation Structure
It is my understanding that you are looking to change your business operation from a sole proprietorship to a different type of business organization
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