Business Structures: Advantages and Disadvantages

In: Business and Management

Submitted By murrywendy1
Words 775
Pages 4
Business Structures: Advantages and Disadvantages
FIN/571
09/23/13
Kenneth Baker

Introduction Starting a business can be challenging for individuals. That individual will have to decide which business structure will be right for their business and develop a solid business plan from that structure. There are many business structures available to new business owners, there is sole proprietorship, partnership, limited liability company and corporation. This paper will identify each structure and list the advantages and disadvantages of each structure.
Sole Proprietorship Sole proprietorship has no other owners to divide profits with, which allows a sole proprietor to use company funds in any way the individual see fit. Sole proprietorships are easier to set up out of the other structures and is easy to separate. Some advantages are no business registration is not required, there is no requirement to file formation documents like the person would if their business structure were LLC. Sole proprietorship has easier bookkeeping. The owner and business are one and the same so it is like balancing your checkbook. Any profits are taxed at the owners individual federal tax rate so that person does not have to file a separate business tax. The disadvantages would be the lack of liability protection for the business owner. This means the owner would have to take personal responsibility to pay every business debt and obligation and their personal assets are not protected because the company are treated as one body.
Partnership
A partnership is two or more individuals that collaborates together for the business. Partnerships can be easily formed and are unincorporated. Partners can share the responsibility of managing the company and share ideas with other partners. An advantage to this is partners are not required to file income taxes as a business structure,…...

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