Lgal_Forms_Paper

Legal forms of Business Paper Business Law LAW 531 Legal forms of business paper Within this paper we will discuss several different legal forms a person can decide to go with when deciding to open a business. As we know when becoming a business owner several thins has to be looked upon. One of the options to look at when starting a business is Sole Proprietorship. Sole proprietorship means having a business and being the sole owner or one person owning the business. A business is started as a toy store. This toy store would carry all different kinds of products that would attract both children and adults. The products would vary on what products would be carried within the store (my own business.org). As a sole proprietor they would have unlimited liability for all debts of the business, and the income and or losses of the business which will need to report on all personal income tax returns completed along with all income, and or expenses that would be reported on a regular basis. By being a sole proprietor, this allows the owner to avoid the expense of going into a partnership or big corporation. Most small businesses start this way. Some of the advantages of being a sole proprietorship owner would be having your own business, not having the expense of having to pay employees for their time worked, all profits would be all for the sole proprietor of the business and nothing to share with another owner within the business. Some of the disadvantages of being in a Sole proprietorship would have to handle all entities within the business with none of the work being shared. Other disadvantages would be not being able as a business owner to step away from the business to relax or take a break from the business or liabilities. Being the primary owner within there would not be any kind of employee disputes of any kind to resolves unless it is with one’s own self which is very doubtful. The only problem I would think could be a challenge for a sole proprietor is not being able to keep up with all the paperwork that would need to be filed for tax purpose. It might look easy but in most case it can be hard along with also trying to keep up with everyday business needs. As a General partnership it means having two or more partners that will have unlimited liability for the debts of the business. The income and expense is reported on a separate return for tax purposes, but each partner then reports his or her pro-rated share of the profits or loss from the business as online on his or her personal income tax return. (myownbusiness.org). When you have general partners within a business organization the partners can raise fund to support larger businesses in different business environments. Partnerships are usually established by having a written or oral agreement. By having such an agreement as partnerships it would have to Operate under Uniform Partnership Act, as modified by any partner agreements. In some cases partnerships must follow legal guidelines and can be modified by the partnership agreement (www.cabrillo.edu). Establishing a large retail store. With some of the products being clothing, shoes, underwear, socks, etc,. Within a partnership there are several different options to chose from One would be general limited which means having at least one general partner plus one or more limited partners liability limited to investments for limited partners; unlimited liability for general partners. No management would have to participate for limited partners. Usually requires a certificate of limited partnership and a written partnership or an agreement. Joint venture is also another choice of going with when establishing a business (www.cabrillo.edu). The advantages that I can see going into a general business partnership would be having more people to invest in the business to assist in getting it started. By having multiple partners it would have less stress on one individual as far as the work load it would be divided equal amongst the business partners. Some of the disadvantages would be not all business partners wanting to continue in the business relationship. If this happens then they would need to do buy the person out of the business and the others would continue to run the business. Potential problems I can see within the general partnership would be having all partners wanting to run the business in several different ways and being able to come to a sound how they want the business to run. If all parties do not agree on this the business could also be a failure in its own way. With this business you would have to have employees within the business and there could be the possibility of running into employee theft, employees not being able to get along with each other Such as (sexual harassment) etc,. When attempting to attract other potential partners there must be some type of strategy planned to get them to decide to become a partner like offering more products, showing them that once the new products have been incorporated how much additional revenue will be generated. When attracting other investors they are interested in the bottom line of things. Limited Liability Company is having limited liability a company provides limited liability for all of its members, but typically can be treated as a partnership for federal income tax purposes. State laws may differ as to whether it is treated as a partnership or a corporation for state income tax purposes. It can also be managed by all of the members of can have it centralized management in one or more of the members(myownbusibess.org). Establishing a business in a state where they have a higher tax rate. An LLC can elect to be taxed as a sole proprietor, partnership S Corporation or C corporation (as long as they would otherwise qualify for such tax treatment), providing for a great deal of flexibility.(cpa.utk.edu). California would be a good place of starting such a business since their tax rate is really high. Any business established in that area will still be mandated by the laws and regulations of that state. With establishing a business in a state like California and not knowing all the tax laws some from the area would need to know the laws backward and forward in order to maintain the business. “S” Corporation: A corporation that has made an election to be an “S” Corporation for federal income tax purposes is treated as a partnership for tax purposes, although it is treated as a regular corporation for other purposes(myownbusiness.org). With an “S” Corporations you do not pay any federal income taxes. Instead, the corporation’s income or losses are divided among and passed through to the shareholders (cpa.utk.edu). I would establish a company and not pay any taxes this company would only have one class of stock and would not have more than 100 shareholders. With this kind of business I would think there would not be any kind of liability only because the shareholders are just that shareholders who own part of the business and have a voice or a vote to make when business decisions are needing to be made as a whole. No liabilities would arise since no employees are involved. In conclusion before starting a business is smart and think about which way be beneficial to the business and those that are involved. Thinking before making a decision is always the best choice to go with when all options and how they would affect you depending on the way things are going. References: http://www.myownbusiness.org http://cpa.utk.edu