FIN 571 Week 2 Individual Assignment Bu
Dear John Owner, I would like to congratulate you on on your efforts of opening a new business. There are numerous aspects to controlling a business, but then again the most significant and crucial aspect is to decide the category of business you want to start and its model.
When starting up a new business, an individual has the opportunity of starting a sole proprietorship, partnership, corporation, or LLC (Limited Liability Company). A sole proprietorship is a company that is run by a sole owner. The sole proprietor is the sole possessor of the business and is the only individual who manages the company. The sole proprietor is in authority of giving all taxes for the incomes because the sole proprietor makes all the profits. The sole owner is also responsible for all debts. A partnership is a company that is maintained by more than one individual. For an organization to be titled a partnership the establishment must have one or more proprietors that have not filed their articles of incorporation in the state to convert into a corporation. If all proprietors have filed it then the business is now a corporation or LLC. In a partnership, every proprietor is accountable for all debts, and is responsible for every transaction in the firm. A corporation is a distinct legal entity that has rights that are not the same as the other members. An alternative kind of business is a Limited Liability Corporation. A Limited Liability Corporation “is a business structure allowed by state statute” (IRS, 2011). A Limited Liability Corporation in principle is a non-human unit. A Limited Liability Corporation is considered a combination of a corporation and a partnership as each owner has restricted personal liability for debts and each owner has the advantage of pass-through taxes. Limited Liability Corporations have to abide by specific rules depending on the state the business is filed. The proprietors of a Limited Liability Corporation are called
When starting up a new business, an individual has the opportunity of starting a sole proprietorship, partnership, corporation, or LLC (Limited Liability Company). A sole proprietorship is a company that is run by a sole owner. The sole proprietor is the sole possessor of the business and is the only individual who manages the company. The sole proprietor is in authority of giving all taxes for the incomes because the sole proprietor makes all the profits. The sole owner is also responsible for all debts. A partnership is a company that is maintained by more than one individual. For an organization to be titled a partnership the establishment must have one or more proprietors that have not filed their articles of incorporation in the state to convert into a corporation. If all proprietors have filed it then the business is now a corporation or LLC. In a partnership, every proprietor is accountable for all debts, and is responsible for every transaction in the firm. A corporation is a distinct legal entity that has rights that are not the same as the other members. An alternative kind of business is a Limited Liability Corporation. A Limited Liability Corporation “is a business structure allowed by state statute” (IRS, 2011). A Limited Liability Corporation in principle is a non-human unit. A Limited Liability Corporation is considered a combination of a corporation and a partnership as each owner has restricted personal liability for debts and each owner has the advantage of pass-through taxes. Limited Liability Corporations have to abide by specific rules depending on the state the business is filed. The proprietors of a Limited Liability Corporation are called
References: IRS. (2014, August 4th). Corporations. Retrieved from http://www.irs.gov/businesses/small/article/0,,id=98240,00.html. Retrieved July 27th, 2011. IRS. (2014, August 4th). Partnerships. Retrieved from http://www.irs.gov/businesses/small/article/0,,id=98214,00.html. Retrieved July 27th, 2011. David, K. S. (2014, August 4th). Llc advantages. Retrieved from http://www.limitedliabilitycompanycenter.com/llc_advantages.html. Retrieved July 27th, 2011.