Legal_Forms_of_Business

Legal Forms of Business Paper Scott Killian University of Phoenix Week ones’ reading assignment dealt with the different types of businesses. Each type of business has advantages and disadvantages, depending on the circumstances. This paper will examine the different types of businesses and present scenarios that will help justify why each particular type of business is the preferred type. Owners who like complete control of all business decisions would be best suited to the sole proprietorship business model. Sole proprietorships require very little money in legal costs to set up, which allows an owner to invest more capital into the business. There are also no business taxes in a sole proprietorship because the profits are taxed through the owners’ personal income taxes. An owner of a local bakery would be an example of a business that would be best suited to a sole proprietorship. Partnerships are a business model where two or more individuals join to form a business. Partnerships are fairly easy to set up and each owner in the partnership shares in the operation and decision making. A group of attorneys would be an ideal partnership business. Each attorney can bring their own particular expertise to the business that would allow more diversity. Partnerships also can raise more funds as each partner can invest in the business. Attracting employees is also an advantage to partnerships because the incentive to be offered a partnership in the business is a big draw. Limited liability partnerships are formed when two or more individuals form a partnership to operate a business but are limited in their liability not only to the company but also to each individual partner in the company. This means that if one partner is negligent, the other partners are not responsible for his or her actions. A doctors’ office would be an ideal limited liability partnership because each doctor in the partnership would carry his own malpractice insurance but still operate under the partnership. A limited liability corporation is a good choice for a business entity if the owners of the business want to shield their personal assets from liability as an LLC is considered a separate legal entity. An LLC is also easy to set up and can be very flexible in its management structure. A home-based business is ideal for an LLC business because of the informal business structure. An LLC can also have an unlimited number of investors and has perpetual existence by allowing members to transfer their ownership. S-Corporations are advantageous for businesses that want to eliminate double taxation because income is passed on to shareholders based on their investment in the company. In regular C-corporations a corporate income tax is assessed and dividends are also taxed. S-Corporations can have up to one hundred shareholders for increased capital investment. The ideal company for a C-Corporation would be a medium-sized company where all the shareholders are family. This would allow the company to stay in the family and shareholders could pass from generation to generation. A person wanting to get into business quickly without the difficulty of building the business from scratch would be a good candidate for a franchise. Franchises are businesses that are already established with a brand name and reputation. Franchises offer proven methods of operation and most have support structures that include marketing and supplier resources. Franchises also give the business owner an exclusive territory to work in. Restaurant chains like McDonald’s or Wendy’s are a couple of the most popular franchises. Corporations have two distinct advantages that make it attractive as a business option. The first advantage is that corporations are separate entities and shareholders are not personally liable for debts incurred by the corporation above their personal investment. The other advantage of a corporation is the ability to offer stock for the purpose of raising capital. The issuance of stock is also a way of recruiting employees. Walmart and Apple are two of the largest corporations in the world and have millions of shareholders. Depending on the circumstances, there are several options for people wanting to operate a business. Each individual should look at all the advantages and disadvantages of each option and make the choice that best suits his or her needs. References Cheeseman H.R. Business Law. Legal Environment, Online Commerce, Business Ethics, and International Issues, Seventh Edition. http://www.allbusiness.com http://www.how-to-start-a-business-guide.com www.smallbusiness.chron.com http://www.morebusiness.com http://ezinearticles.com/'franchises