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Types of organization structures
Types of organization structures
Ways in which a business might be structured
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Business Entity Selection
People go into business to make money. Unfortunately, not everyone considers the proper way to structure his or her business so that it can make money in an optimal way while operating within the framework of the law. Failing to select a structure for a business carefully can mean the loss of that business and of its associated assets. I will discuss various types of business entities that exist and the pros and cons of each. Specifically, I will explore
Sole Proprietorships
General Partnerships
Limited Partnerships
Corporations
Limited Liability Corporations
I will also discuss following business situation:
Joe's Lawn Care and Landscape Equipment Rental
I will determine whether the business is effective in operation, as business currently exists, or if there is a need to make changes to the business entity.
Sole Proprietorship is one individual or married couple in business. Sole proprietorships are the most common form of business structure. This type of business is simple to form and operate and may enjoy greater flexibility of management, less legal regulation, and fewer taxes. Although this is the easiest form of business to start, "the income and losses are treated as personal and will be filed on a Schedule C along with the regular Form 1040 tax return" (IRS, 2004). If profits are minimal, the owner will be paying less in income taxes with this form of business than with a corporation. However, the business owner is personally liable for all debts incurred by the business. Sole proprietorships cannot take advantage of special business income tax rates since all income is considered individual income. In addition, sole proprietors are not protected from personal liability if they get into trouble with a client. If an upset client decides to sue, they sue the proprietor personally. If the proprietor must declare his company bankrupt, he files for bankruptcy personally. Moreover, by definition, a sole proprietorship can have only one owner, and that owner must be a "natural person" (i.e., not a corporation, trust, LLC, or other such entity.) Finally, one cannot sell or inherit a sole proprietorship.
A General Partnership is composed of two or more persons (usually not a married couple) who agree to contribute money, labor, and/or skill to a business. Each partner shares the profits, losses and management of the business and each partner is personally and equally liable for debts of the partnership. In terms of asset protection, general partnerships can be even worse than sole proprietorships.
Partnership – “A legal entity formed by two or more co-owners to operate a business for profit.” (Longenecker, Petty, Palich, Hoy, Pg. 202) In a partnership, the advantage for the owners is the capability to reduce the workload and the financial burden, especially if each partner has management skills that enhances the business. The disadvantages of a partnership such as personal conflicts and leadership expectations, therefore this organizational form should only be chosen once all other options have been considered.
Businesses exist to produce goods and services. If someone is thinking of starting up their own business or becoming part of an existing business, they would have to have the knowledge of what makes business work successfully and know how to how to apply that knowledge in the particular area of business. For this unit I will be entering and exploring the world of business. For this unit I will encounter and evaluate information provided by certain businesses and actually gather my own information from at least one business. The business I have chosen to study is J Sainsbury’s.
The owner reports business gain or losses on his or her personal income tax return. A sole proprietor is taxed on all assets from the business at appropriate personal tax rates. The corporation income, and acceptable expenses, is reflected on the person’s tax return. All corporation income is taxed to the owner in the year the business acquire it, whether or not the owner take away the money from the business. No disconnect federal income tax return is acquired of the sole proprietor.
Jeb and Josh's choice to open a business is incredible; nevertheless, the two men would need to choose which business substance would best fit their business. In settling on their choice, they must consider the commitments that each would have in working in this business, and what degree of obligation and control they need to have. Jeb and Josh have a couple of substitutes to consider in their choice of picking a business element. The real types of business associations contain of, sole proprietorship, partnerships, and organization.
Being the owner of LSU, Joe probably operates as a sole proprietor. It is recommended that the business change its entity selection to limited liability company (LLC). The main advantages to an LLC are the protection the LLC owners receive from business creditors, and the fact that the owners can still participate in the management of the business.
There are two types of partnerships to be aware of. A general partnership is where the partners are both involved in the day to day operations of the business. A limited partnership is when an investor has contributed to the business, but is not involved in the day to day operations. The Uniform Business Partnership Act (UPA) was designed to encourage uniformity from state to state, but it
...g. Businesses structures and regulations are strong and firm which help businesses around the nation. The rules and regulations from the federal government help and keep the people safe. Starting a business is easy and profitable. It may be easier to start a sole proprietorship rather than a corporation. But many can receive help from family or friend and start a partnership where there is help and support of a partner. There are advantages and disadvantages for all forms of business. There are endless opportunities for the American people. There optimistic attitudes can lead them to great wealth.
There are many different types of business structures, but if you own and operate a business that it is a sole
A Sole Trader is a business that is owned by only 1 person. They are
Pondering our cautious examination, XYZ Investments Company1 (XYZ) is a supplier of designing, basic trust, and ownership organizations to establishments, capable financing specialists, and high aggregate stakes individuals/families. XYZ's business is dealt with into four claims to fame units. The outlined in Exhibits consolidate IT Services, Asset Management, Fund Services, and New Business Investments. The Fund Services (FS) forte unit gives association organizations to basic stores. These organizations fuse trade get ready, execution reporting, record keeping, and genuine organizations.
A partnership is defined as a business created through a legal agreement between two or more people who are jointly responsible for the success or failure of the business. Lastly, a business that is chartered by a state and legally operates apart from the owner/owners is referred to as a corporation. What I mean by the word “chartered” is a legal document that grants certain rights and privileges to the company by the state. We also learned a lot about fashion shows and how it affects
Partnerships rely on special bonds and trust between another individual which can have many advantages and disadvantages towards a company. Some advantages would be easier paperwork load, easy to start up, and taxes are simplified. From AllBusiness, the article claimed, “The biggest advantage of a general partnership is the tax benefit...Creating a general partnership is simpler, cheaper, and requires less paperwork”. In other words, a partnership can be less of a hassle considering you have another person to share the workload. Major disadvantages towards this formation would be management issues and liable debt. Specifically, like sole proprietorship, the debt of the partnership would be shared among the owners. Also, management problems can occur if the relationship between the owners are not strong causing someone to back out of the business or to lose a friendship. An example of a partnership ship would be the ice cream company Ben & Jerry's. A business that started out with two guys and a $12,000 investment back in 1978 and as the business grew so did their company. Ben & Jerry's selection of becoming a partnership has allowed the ice cream company to thrive for almost over 40 years. The relationship formed between Ben & Jerry's has allowed their ideas to be spread not only locally but internationally with the help of putting trust into someone else and taking some of the stress off as
Before a partnership formation is imminent, the business needs to decide on which type of partnership to form. There are three types of partnerships: (1) general partnerships, (2) limited partnerships, and (3) joint ventures. All three partnerships contain two or more owners, but all partners assume equal division of ownership, liabilities, and profits in a general partnership. Limited partnerships offer limited liability protection based on each partner’s contribution percentage. Joint ventures are classified as general partnerships with limited existence periods. Once a type of partnership has been determined, the business fulfills a series of requirements before the partnership can be successfully formed. The first step is to register
When two or more persons form a partnership to jointly operate as owners of the business, not only they would share in both profits and loss but also a mutual obligation to each partner. An obligation entails a corresponding right and duty deriving from a legal bond or tie between the obliged and the obligee; and this relationship is interdependent. Partnership in English Law works by way of a matrix of reciprocal agency agreements between each partner and his co-partners generally creating similar obligations. Although the fact of partnership entails the existence