There are three types of businesses: sole proprietorship, partnerships, and corporations. Each type has its own advantages and disadvantages. The types of businesses will first be defined, then illustrated by using fictional companies; demonstrating the advantages and disadvantages of each one.
A sole proprietorship business is one that is solely owned. Meaning, that it in regards to all legalities and operations, the owner is responsible for all profits and losses. A partnership is a business in which more than one person owns and operates the business. Each owner is therefore personally liable for debts and can be held liable in legal law suits. A corporation “is an independent legal entity owned by shareholders. This means that the
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His only choice was to seek out additional funding for his business.
Discussing his business dilemma with his friend Joe, Sam offered him to become joint-owner in his business. He thought by forming a partnership business, together they would have a greater chance in securing the funding that was necessary in order to purchase more product. Sam, aware that Joe had additional skill sets to bring into the business, knew that this would also be benefitting to the business.
S&J International Imports was then established after creating a suitable business plan. They then proceeded and found a lender who agreed to loan the necessary funding to purchase more product stock for their business. They kept their own business records since both were individually responsible for paying their own share of partnership income taxes on their personal tax returns.
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Due to the complexity that a corporation can have, Sam hired a corporate attorney to set it up and file the required federal and state agency articles and licenses. Sam also hired an accountant to keep track of all the business transactions and file the necessary forms with the IRS. Sam learned that corporations can face higher tax rates than a sole proprietorship or partnership business and also have the potential to be at risk for double taxation. (Sole Proprietorship | The U.S. Small Business Administration |
Corporation – “A business organization that exists as a legal entity and provides limited liability to its owners.” (Longenecker, Petty, Palich, Hoy, Pg. 205) The main advantage of a corporation is that the business liability falls onto this entity instead of the individuals that own it. The disadvantages of this organization are found mostly in its formation. A corporation is expensive to create and requires compliance with state
determine the form of business to start. The form of business we choose to establish new
There are many types businesses in this world; these include Sole trader, Plc, Ltd, Partnership, Co-op and franchise. These types of businesses are all different from each other. Some of them need just one owner, some have hundreds.
Joint Venture is “a partnership, individual, or corporation that pools labor and capital for a limited period of time” (Kubasek, Brennan, Browne, 2015, p. 431). This method can increase liability and limit outside opportunities where the business can not expand their product line and have to utilize the products provided by the company they have a joint in a agreement. The mission of the coffeehouse is to be unique and special. This type of model would not allow originality and for that reason, its not recommend that Shania get involved with a joint venture.
Taking on the risk to open you own business is not a smooth, easy process; although, perseverance can take you a long way. Troy Smith made several attempts at opening restaurants independently as a sole proprietor, but it was until a small root beer stand came into his possession did he find the success he was looking form. This stand called Top Hat was about to become a parking lot when Smith realized it’s value and put his focus into making it successful, while watching this success grow Charles Pappe became interested and Pappe and Smith formed a limited partnership; whereas Smith was the general partener that made the business decisions and Pappe was the limited partner that invested money ad concentrated on sales. This differs from a
You start a business with your friend and split equity equally. During the first year, you realize he has not been contributed for the last 10 months. He still owns 50% of the business, now what? According to Mike Moyer, the author of Slicing Pie, splitting equity between partners is one of the biggest and most common mistakes an entrepreneur makes. Slicing Pie provides specific solutions to this problem and presents us with models to be able to accurately calculate the fair amount of equity each person should have.
Exploring the Types of Business Organisations There are two Business Sectors: Public Sector These are businesses owned and run by the government. Some examples of Services provided in the public sector are the postal service, schools, colleges, housing environment, some bus and train services, fire, police, ambulance and local justice and social services. Their method of raising capital is different as Private Sector businesses have to raise their own capital e.g. their own money, a bank loan etc. The Public Sector business can get the money required from the Treasury or from local rates.
Task One E1 They type of businesses 1. Private and Public enterprise 2. Limited Liability 3. Franchising I will define each type of business with some advantages and disadvantages. For The Coca-Cola Company ... ...
Now, Tesco as become more widely popular overtime in the UK since it was first invented and has since
There are many different types of business structures, but if you own and operate a business that it is a sole
the firm, Mitch forms a plan to indite the partners of the firm by gathering
A few years ago, a friend approached me about partnering with her in the purchase of a day spa. I had always wanted the freedom and satisfaction that comes with being my own boss. After deciding to move forward with my partner and buy a day spa, I learned to put together a business plan, personnel criteria, and marketing plan.
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
There are many advantages and disadvantages when owning your own business. When you own you own business, it’s known as a sole proprietorship. But with any type of business, there will always be advantages and disadvantages.
For some people, being the boss, and which by boss I mean business owner, would be the greatest thing ever. Most think you get to pick your own hours, make the most money, and make everyone do the things you want done. Of course there is work involved and it takes work to make it but the rewards will be better owning a business that succeeds. The ultimate goal is becoming a millionaire and retiring at the age of forty and just drawing money from business production. However they really don’t understand the work it takes to make it a million dollar company. When these people are finally able to own a business they get a rude awakening. I am in no way trying to offend the typical business owner when I say, owning a business can be a challenging task that can cause many complications in your life and if you’re not careful they can change your life entirely.