Types of Business Ownership

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Unlimited liability of at least one partner and possibly all partners, except in limited partnership debts. b. The life of a partnership is unstable, since changing partners by adding new ones or by death or departure of partners causes the partnership tp terminate...
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Obtaining large sums of capital is relatively difficult, as financing cannot be obtained from the public through a stock offering. d. The acts of just one partner, even unauthorized acts in many cases, bind all partners. e. An individual partnership interest cannot be sold or transferred easily...
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Business Entity Regulations Starting a business is exciting and challenging. A big part that plays into the success or failure of a business is whether or not the business fulfilled the obligations to the government...	2 / 476
Business Structure The easiest business organizational structure is the sole proprietorship. Having no restrictions on the size of the business is an advantage to the sole proprietorship...	2 / 417
Business Venture Capital Buying an existing business can be an excellent way to become a business owner or to expand your present business. You can save time and effort of building a customer and supplier base...	2 / 336
Legal forms of business Definition "Relation which subsists between persons carrying on a business with common view to profit" In a Partnership: ? You want it to be really easy to set up ? You can lose all your money and even your possessions if you fail ? You want to keep all you financial affairs private ? You want to share control with a few other people ? You want to share profits with a few other people ? You want other people to be able to make decisions without consulting you, even though you may lose money because of this ? You want to be able to sell your business to someone else Deed of Partnership This is a legal document that states partners' rights in the event of a dispute, it covers the following issues: ? How much capital each partner will contribute ? How profits and losses are shared amongst the partners ? The procedure for ending a partnership ? How much control each partner has ? Rules for taking on new partners Financing A firm might find that each partner specialises in one aspect of finance, for example: tax, law, investments, or VAT returns...	3 / 685
Operational Procedures for a business plan • The Preview • The Description • The Marketing Plan • The Financial Plan • The Management Plan • The Summary Business structures Before you can go into business, you must select a legal structure...	1 / 230
stock exchange Type of Entity Main Advantages Main Drawbacks Sole Proprietorship Simple and inexpensive to create and operate Owner reports profit or loss on his or her personal tax return Owner personally liable for business debts General Partnership Simple and inexpensive to create and operate Owners (partners) report their share of profit or loss on their personal tax returns Owners (partners) personally liable for business debts Limited Partnership Limited partners have limited personal liability for business debts as long as they don't participate in management General partners can raise cash without involving outside investors in management of business General partners personally liable for business debts More expensive to create than general partnership Suitable mainly for companies that invest in real estate Regular Corporation Owners have limited personal liability for business debts Fringe benefits can be deducted as business expense Owners can split corporate profit among owners and corporation, paying lower overall tax rate More expensive to create than partnership or sole proprietorship Paperwork can seem burdensome to some owners Separate taxable entity S Corporation Owners have limited personal liability for business debts Owners report their share of corporate profit or loss on their personal tax returns Owners can use corporate loss to offset income from other sources More expensive to create than partnership or sole proprietorship More paperwork than for a limited liability company which offers similar advantages Income must be allocated to owners according to their ownership interests Fringe benefits limited for owners who own more than 2% of shares Professional Corporation Owners have no personal liability for malpractice of other owners More expensive to create than partnership or sole proprietorship Paperwork can seem burdensome to some owners All owners must belong to the same profession Nonprofit Corporation Corporation doesn't pay income taxes Contributions to charitable corporation are tax-deductible Fringe benefits can be deducted as business expense Full tax advantages available only to groups organized for charitable, scientific, educational, literary or religious purposes Property transferred to corporation stays there; if corporation ends, property must go to another nonprofit Limited Liability Company Owners have limited personal liability for business debts even if they participate in management Profit and loss can be allocated differently than ownership interests IRS rules now allow LLCs to choose between being taxed as partnership or corporation More expensive to create than partnership or sole proprietorship State laws for creating LLCs may not reflect latest federal tax changes Professional Limited Liability Company Same advantages as a regular limited liability company Gives state licensed professionals a way to enjoy those advantages Same as for a regular limited liability company Members must all belong to the same profession Limited Liability Partnership Mostly of interest to partners in old line professions such as law, medicine and accounting Owners (partners) aren't personally liable for the malpractice of other partners Owners report their share of profit or loss on their personal tax returns Unlike a limited liability company or a professional limited liability company, owners (partners) remain personally liable for many types of obligations owed to business creditors, lenders and landlords Not available in all states Often limited to a short list of professions	2 / 520
Limited Liability With more businesses opening up everyday, concerns regarding business and personal liability have heightened. This paper will discuss the roles of the limited liability partnership as well as the corporation...	3 / 732