Running head: DIFFERENT TYPES OF BUSINESSES
1
Different Types of Businesses
When considering to open a new business, there are different options you can choose from: a sole proprietorship, a partnership, and a corporation. This paper will explain the strengths and weaknesses for each option, which will help you decide which is the best option for you when deciding which type of business is best to open.
To begin, there’s a sole proprietorship. This is the easiest type of business to open, therefore, the most common. The following are the strengths of a sole proprietorship. With this type of business, you and the business are one in the same. If your business makes a profit, so do you. Even though the business may have a separate bank account from your personal bank account, you have the authority to spend that money however you choose to. This type of business gives you independence. You’re able to make business decisions on your own, without having to discuss with partners. You can schedule your own business hours and work days, decide if or when you’d like to grow the business, or take a vacation. You are your own boss.
With these strengths comes some weaknesses. With this type of business, it can only have one owner, therefore, you’re unable to bring anyone else into the business. Should something happen to you, for example you die, you’re unable to leave the business to someone else.
Therefore, when you die, so does your business. One of the main weaknesses is having to raise your own capital for the business. Some businesses may get loans from family members, but it’s just that, a loan. They are no way involved or part of the business. Another option for entrepreneurs is to apply for a bank loan. ...
... middle of paper ...
...tion process. Once your business is registered, you must obtain business licenses and permits.
Regulations vary by industry, state, and locality. Another weakness is the taxes, in some cases, corporations are taxed twice. They are first taxed, when the company makes a profit, and again when dividends are paid to shareholders. And finally, the additional paperwork that’s required to maintain the corporation. Corporations are highly regulated by federal, state, and in some instances, local agencies. As a result, there are increased paperwork and recordkeeping duties associated with this entity.
In conclusion, there are several types of businesses you can open. Each of them have their strengths and weaknesses. It’s important you review each of them to help determine which type of business will be best for you.
Running head: DIFFERENT TYPES OF BUSINESSES
5
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.
Why and how do policy-makers and practitioners intervene to encourage new firm formation and development?
I would say that the source would be through investors, or using assets to borrow the money.
2.in other case, if he thinks of starting this business as a broader venture , he needs to raise capital
You have no business to run and all you have to worry about is to get
In the earlier days, if we want to start the new project, we could collect the money by either taking loan from bank or lending money from family/friends. These are the only option we could start the new project/venture. “Due to global banking crisis, most of the banks in U.K were completely shut-down and some were getting down. That led to obtain funding for new business was impossible. Then crowd funding had come to picture to get their businesses off the ground”. (Coffer, David, 2013).
A person who runs the business on his own also gets to keep prophet of
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
business is a way of life to most of those who do it and do not want to quit
All that is needed is to register the company with the state and apply for an occupational license and any additional licenses required by the state. With the easy organization of a sole proprietorship, almost anyone can start his or her own business.
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.
There are two main ways to raise money for a project, growing business, or startup company: debt financing and equity financing. Debt financing includes long-term loans, while equity financing is the process of raising capital through the sale of shares in an enterprise. It is essentially the sale of an ownership interest to raise funds for business purposes.
find it difficult to set up a business and make it a success. This is