A proprietorship - There are also tax advantages in...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
A proprietorship, a partnership and a corporation are the three different forms of business organization. There are advantages and disadvantages to a business being formed in each of the three, depending on the situation and circumstances. A sole proprietorship is a business owned by one person. A partnership is a business owned by two or more people. A corporation is a separate legal entity owned by stockholders that hold transferable shares of stock. In choosing one over the other, an entrepreneur would consider which form of business fit their situation the best. A corporation has an advantage of limited liability protection to its owners. The personal assets of owners are not at risk in satisfaction of corporation liabilities or debts. The corporation also pays taxes separately from its owners, has an easier time raising finances and has less struggle transferring ownership. A partnership has an advantage of shared control with partners. Having a uniform cause and focus allows for increased skill levels and unique resources.
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: There are also tax advantages in becoming a partnership over incorporating. A proprietorship or sole proprietorship has the advantage of being simpler and easier to initially set up. Control of a sole proprietorship is maintained most likely by the founder of the company. In starting a new business, I would choose a corporation. I would form a corporation because I would need to raise money for my venture and selling stocks to friends and investors would raise the necessary capital the corporation would need to get started. I would also want the limited liability of a corporation so that in the case of the company incurring bad debt or liabilities from lawsuits or litigation, my personal assets would be protected from any efforts to collect against the corporation. I would also be able to become an employee of my own corporation and be entitled to compensation and benefits; therefore I could get paid while starting my business!...
View Full Document

{[ snackBarMessage ]}

Ask a homework question - tutors are online