There are 4 forms of organization that are available for any individuals or partners that want to start a business of their own. The 4 forms of organization are Sole Proprietorship, Partnerships, Corporations and Limited Liability Company. Each of these organizations operate differently with advantages and disadvantages to it.
Sole Proprietorship: A sole proprietorship is a small business that is own by one individual who is responsible for running the business. The owner owned all profits and assets but is also responsible for all liabilities and debts. The advantage of a sole proprietorship is you are at complete control of the business and all decisions are at your own will. As for tax wise, it is cheaper too (tax savings) and all profits from the business goes directly to your own personal tax return. The disadvantages of a sole proprietorship are you’re limited to “using funds from personal savings or consumer loans,” and your benefits, such as “medical insurance premiums are not directly deductible from business income.”
Partnerships: “Two or more people share ownership of a single business.” In a partnerships business legal contract needs to be signed and understood by both parties such as “how decisions will be made, profits will be shared, disputes will be resolved, or what steps will be taken to resolve the partnership when needed.” There are 3 types of partnerships: (1) General Partnership; (2) Limited Partnership with limited liability; and (3) Joint Venture. Advantages of a partnerships profits from the business flow to the partner’s personal tax return and the business may lead to success with the help of two or more. Disadvantages may be one is responsible for another’s actions, any profits and assets must be shared, and disagreements can occur.
Corporations: A corporation is chartered by the state and its owners are shareholders. Some advantages to