Week 4 Business structure.doc - Running Head BUSINESS STRUCTURES 1 Business Structures BUS311 Business Law I Name Institutional Affiliation Date

Week 4 Business structure.doc - Running Head BUSINESS...

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Running Head: BUSINESS STRUCTURES 1 Business Structures BUS311: Business Law I Name Institutional Affiliation Date
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BUSINESS STRUCTURES 2 Table of Contents 1.0 Introduction ........................................................................................................................................... 3 2.0 Sole proprietorship ................................................................................................................................ 3 2.1 Formation of a sole proprietorship ..................................................................................................... 3 2.2 Personal Liability ............................................................................................................................... 4 2.3 Advantages of sole proprietorship ...................................................................................................... 4 2.4 Disadvantages .................................................................................................................................... 5 3.0 partnership ............................................................................................................................................. 5 3.1 Formation .......................................................................................................................................... 5 3.2 Personal liabilities. ............................................................................................................................. 6 3.3 Advantages of partnerships ................................................................................................................ 6 3.4 disadvantages of Partnerships. ........................................................................................................... 6 4.0 Limited Liability company .................................................................................................................... 7 4.1 Formation .......................................................................................................................................... 7 4.2 Liabilities of LLC .............................................................................................................................. 7 4.3 Advantages of LLC ............................................................................................................................ 7 4.4 Disadvantages of LLC ....................................................................................................................... 8 5.0 Corporation ............................................................................................................................................ 8 5.1 formation ........................................................................................................................................... 8 5.2 Liabilities of a corporation ................................................................................................................. 8 5.3 Advantages of a corporation .............................................................................................................. 9 5.4 Disadvantages of a corporation .......................................................................................................... 9
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BUSINESS STRUCTURES 3 Business structures 1.0 Introduction Business startup is a major step that requires various points of view. In setting up a business, there are so many factors that should be put into consideration. Among the factors that any investor would first need to consider is the setting of the business. Rogers (2012) argues that any business founded on just any structure, the chances are the business would in the long run collapse or fail. This however does not mean that there is any business structure that supersedes the other rather it means that a person has to choose the right structure right business structure. This paper is dedicated to discussing four forms of business structures or units, the steps that they use in formation, the personal liability issues for the owners, taxation and advantages and disadvantages of each. The four forms to be discussed are: sole proprietorship, partnership, LLC, and a corporation. 2.0 Sole proprietorship Sole proprietorship is the simplest form of business unit. This business structure entails a singe owner who is responsible of operating the business. Sole proprietorships are considered to e the most basic forms of business units. Owing to the fact that the business is operated by a single person who is the owner or a member of a family, the business is considered to have no legal distinction between the owner and the business entity (Rogers, 2012). 2.1 Formation of a sole proprietorship According to Choose (2015), sole proprietorship does not require long legal formalities in formation. This is so owing to the fact that there is a single owner of the business and hence no
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BUSINESS STRUCTURES 4 any type of formal action in forming this business unit is required. Additionally, the business as aforementioned is said to have no legal distinction between the owner and the business entity. 2.2 Personal Liability Sole proprietorships are operated by one person. This means that the owner has all the rights regarding the business. Any profit that the business makes is a share of the owner who in this kind is rewarded for risking through investing in the business. The owner is responsible of making ay decisions regarding the profit that is realized by the company.
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