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Topics: Corporation, Business law, Business Pages: 2 (530 words) Published: October 11, 2013
SUBDOMAIN 310.1 - BUSINESS LAW
Competency 310.1.2: Organizational Forms - The graduate can select the appropriate form of organization for a business. Objectives:
310.1.2-01: Differentiate between a sole proprietorship and general partnership. 310.1.2-02: Differentiate between a general partnership and a limited partnership. 310.1.2-03: Identify the distinguishing characteristics of C-corporations. 310.1.2-04: Identify the distinguishing characteristics of S-corporations. 310.1.2-05: Recognize the characteristics of a limited liability company (LLC). 310.1.2-06: Determine the appropriate business form for a given situation. Introduction:

As you work on this task, ask yourself why one form of business organization would be selected over another, particularly for a small business. What are the advantages and disadvantages of each form? The business entity characteristics owners should consider fall into these seven categories: • Liability: What are the limits on liability and protection of not only business assets, but personal assets and future earning power of the owner beyond this particular business? • Income taxes: What are the features of each business entity that affect the amount of federal, state, and local income taxes paid by the business and/or owners? • Longevity or continuity of the organization: What features of each form relate to forced dissolution of the business organization? • Control: Who has ultimate control over important decisions? How much control does the owner have to grant to others? • Profit retention: What portion of the profits does the owner have to give up because they have to be shared with others? How does this affect return on investment? • Location (Expansion): What are the implications for moving or expanding the business into a different state? Will a separate legal entity have to be created or new documents filed in the new state? Are there advantages or disadvantages regarding how state taxes will be assessed? •...
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