Business Structures
Business Structures
FIN/571
November 25, 2013
Business Structures
Starting a business involves a large amount of planning. Part of this planning is determining what type of business structure is the proper structure for the business. There are several types of business structures. The purpose of this paper is to identify the different business structures, and to explain how each business structure may and might not be advantageous.
Business Structures
There are three different types of business structures. The first type of business structure is a sole proprietorship structure. The second type of business structure is a partnership structure and the third type of business structure is a corporation structure.
Sole Proprietorship In the sole proprietorship structure an individual owns and operates the business. The sole proprietorship structure is the easiest legal structure to engage in when starting a business. Because the fees to obtain a business name and certificate are minimal a sole proprietorship is an inexpensive way to begin a business. An individual who prefers complete authority with the business decisions and is limited on funds a sole proprietorship is the ideal structure. The results are that the earnings are taxed only once and can be taxed as personal income. The disadvantages of the sole proprietorship structure are that the individual is liable for everything. This includes the company’s financial status. Another disadvantage is that it is hard to receive financial backing for a sole proprietorship structured business.
Partnership
Another business structure is the partnership structure. In a partnership structure the ownership and operation of the business is between several people. There are two types of partnerships, general, and limited. A general partnership can be a written agreement between two or more people and a limited partnership will limit the liability of each partner according to their capital
FIN/571
November 25, 2013
Business Structures
Starting a business involves a large amount of planning. Part of this planning is determining what type of business structure is the proper structure for the business. There are several types of business structures. The purpose of this paper is to identify the different business structures, and to explain how each business structure may and might not be advantageous.
Business Structures
There are three different types of business structures. The first type of business structure is a sole proprietorship structure. The second type of business structure is a partnership structure and the third type of business structure is a corporation structure.
Sole Proprietorship In the sole proprietorship structure an individual owns and operates the business. The sole proprietorship structure is the easiest legal structure to engage in when starting a business. Because the fees to obtain a business name and certificate are minimal a sole proprietorship is an inexpensive way to begin a business. An individual who prefers complete authority with the business decisions and is limited on funds a sole proprietorship is the ideal structure. The results are that the earnings are taxed only once and can be taxed as personal income. The disadvantages of the sole proprietorship structure are that the individual is liable for everything. This includes the company’s financial status. Another disadvantage is that it is hard to receive financial backing for a sole proprietorship structured business.
Partnership
Another business structure is the partnership structure. In a partnership structure the ownership and operation of the business is between several people. There are two types of partnerships, general, and limited. A general partnership can be a written agreement between two or more people and a limited partnership will limit the liability of each partner according to their capital
References: University of Phoenix. (2013). Planning Your Business: Research, Goals, and Business Plans. Retrieved from University of Phoenix, FIN/571 website