If you were to open a business, how would it be organized? Identify the type of...

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Accounting

If you were to open a business, how would it be organized?Identify the type of business you might start and why you wouldchoose that form of organization.

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Of all the choices you make when starting a business one of the most important is the type of legal structure you select for your company Not only will this decision have an impact on how much you pay in taxes it will affect the amount of paperwork your business is required to do the personal liability you face and your ability to raise money The most common forms of business enterprises in use in the United States are the sole proprietorship general partnership limited liability company LLC and corporation Each form has advantages and disadvantages in complexity ease of setup cost liability protection periodic reporting requirements operating complexity and taxation Also some business forms have subclasses such as the C corporation S corporation and professional corporation Choosing the right business form requires a delicate balancing of competing considerations Learn how to select plan and organize the business form that is a perfect fit for you Types of Business Entities The type of business entity you choose will depend on three primary factors liability taxation and recordkeeping Heres a quick look at the differences between the most common forms of business entities A sole proprietorship is the most common form of business organization Its easy to form and offers complete managerial control to the owner However the owner is also personally liable for all financial obligations of the business A partnership involves two or more people who agree to share in the profits or losses of a business A primary advantage is that the partnership does not bear the tax burden of profits or the benefit of lossesprofits or losses are passed through to partners to report on their individual income tax returns A primary disadvantage is liabilityeach partner is personally liable for the financial obligations of the business A corporation is a legal entity that is created to conduct business The corporation becomes an entityseparate from those who founded itthat handles the responsibilities of the organization Like a person the corporation can be taxed and can be held legally liable for its actions The corporation can also make a profit The key benefit of corporate status is the avoidance of personal liability The primary disadvantage is the cost to form a corporation and the extensive recordkeeping thats required While double taxation is sometimes mentioned as a drawback to incorporation the S corporation or Subchapter corporation a popular variation of the regular C corporation avoids this situation by allowing income or losses to be passed through on individual tax returns similar to a partnership A hybrid form of partnership the limited liability company LLC is gaining in popularity because it allows owners to take advantage of the benefits of both the corporation and partnership forms of business The advantages of this business format are that profits and losses can be passed through to owners without taxation of the business itself while owners are shielded from personal liability 1The Sole Proprietorship The sole proprietorship is the simplest business form under which one can operate a business The sole proprietorship is not a legal entity It simply refers to a natural person who owns the business and is personally See Answer

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If you were to open a business, how would it be organized? Identify the type of...

90.2K

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Question

Accounting

If you were to open a business, how would it be organized?Identify the type of business you might start and why you wouldchoose that form of organization.

Answer & Explanation Solved by verified expert

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