Business Organizations

Business Organizations - Risks: Each partner is liable for...

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FORMS OF BUSINESS ORGANIZATION Edited by: (Your Name Here) 1. Proprietorship – This is the simplest form to use when starting a business. Benefits: Fewer legal expenses All profits are the property of the owner who has the freedom of operation No corporate reports are required Business losses are deductible from personal income when federal income tax is determined Risks: Unlimited liability, which could involve your personal assets It may be more difficult to raise capital 2. Partnership – Involves two or more people who sign a partnership agreement, usually through the local county government. Benefits: No registration or filing fees are required unless the partnership is a limited one Combined abilities of more than one person Added capital may be available There are no state incorporation fees or capital stock taxes Business losses are deductible from personal income taxes of each partner
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Unformatted text preview: Risks: Each partner is liable for all the debt incurred by the business Each partner is responsible for the action of all other partners that creates an obligation for the business 3. Corporation A corporation is a legal form of organization made possible by state laws. It is an impersonal entity and exists without reference to particular individuals who may share its ownership and direct its activities. Benefits: Liability is limited to the amount of funds invested in the business A corporation is long-lived Capital is easier to raise Ownership in the corporation is easily transferred Risks: Government reports must be filed Federal and state regulations of corporations are increasing Subject to more taxes than a properietorship or partnership...
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