acc111 lesson1 essay - Write a 500-1,000-word essay describing the four types of business entities and the necessary steps used when analyzing business

acc111 lesson1 essay - Write a 500-1,000-word essay...

This preview shows page 1 - 2 out of 2 pages.

Write a 500-1,000-word essay describing the four types of business entities and the necessary steps used when analyzing business transactions. There are four types of business entities, Sole proprietorship, Partnership, Corporation, and Limited-Liability Company (LLC) (RioLearn). It is important to recognize the differences between these entities for a number of reasons. A number of factors can vary; these include, but are not limited to, the number of owners allowed, the life of the organization, liability and taxation rules. A sole proprietorship is owned by single person, the owner is personally liable, all profit is taxed once and treated like earnings, and terminates at the owners choosing or death. A Partnership has all the same qualities of a sole proprietorship, but must be owned by more than one person. A corporation is a separate legal entity, can have an unlimited amount of owners called shareholders, for an indefinite term, owners are not personally liable, and the corporation pays tax as well as the owners/employees. In an LLC each member is only liable for their own actions, the term is indefinite, members are not personally liable and the owners only pay tax on their share of earnings. Because of these variations it is important to understand business transactions and the needs of an organization before making a selection.

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture