Business Forming Advice for John Owner
Business Forming Advice for John Owner
David Tope
FIN/571
February, 2014
Kent Moser
Business Forming Advice John Owner, congratulations on your decision to start and business and the beginning of your business plan development! Below you will find my advice on your objectives of: learning what your options are, the advantages and disadvantages of each, and the possible tax consequences of each. You have six options and they are: sole proprietorship, general partnership, limited partnership, general corporation, subchapter S corporation, and a limited liability corporation.
Sole Proprietorship A sole proprietorship is a business structure that is owned and run by one individual. There is no legal distinction between the owner and business. All of the profits of the business belong to the owner as well as all of the debts. The personal taxes of the sole proprietor are directly affected by the company taxes.
Advantages
A sole proprietorship has several key positive aspects. First is that it is the easiest and simplest business structure to form. Second is that it is very inexpensive to form. Third is that the owner of the business is in control of all of the decisions. Forth is that all of the profits from belong to the owner.
Disadvantages
A sole proprietorship has one key negative aspect. This negative aspect is owner’s liability. The owner in a sole proprietorship is personally responsible for all of the debts of the business. This includes any personal assets to include home equity, bank accounts with cash or securities, and other physical assets of value like personal possessions.
Partnerships A partnership is a business arrangement in which more than one person agrees to work together in hopes of mutual benefits. A General partnership is where partners share in the full profits of the business and the full debts of the business. The profits and losses flow through to the partners’ personal tax returns. A
David Tope
FIN/571
February, 2014
Kent Moser
Business Forming Advice John Owner, congratulations on your decision to start and business and the beginning of your business plan development! Below you will find my advice on your objectives of: learning what your options are, the advantages and disadvantages of each, and the possible tax consequences of each. You have six options and they are: sole proprietorship, general partnership, limited partnership, general corporation, subchapter S corporation, and a limited liability corporation.
Sole Proprietorship A sole proprietorship is a business structure that is owned and run by one individual. There is no legal distinction between the owner and business. All of the profits of the business belong to the owner as well as all of the debts. The personal taxes of the sole proprietor are directly affected by the company taxes.
Advantages
A sole proprietorship has several key positive aspects. First is that it is the easiest and simplest business structure to form. Second is that it is very inexpensive to form. Third is that the owner of the business is in control of all of the decisions. Forth is that all of the profits from belong to the owner.
Disadvantages
A sole proprietorship has one key negative aspect. This negative aspect is owner’s liability. The owner in a sole proprietorship is personally responsible for all of the debts of the business. This includes any personal assets to include home equity, bank accounts with cash or securities, and other physical assets of value like personal possessions.
Partnerships A partnership is a business arrangement in which more than one person agrees to work together in hopes of mutual benefits. A General partnership is where partners share in the full profits of the business and the full debts of the business. The profits and losses flow through to the partners’ personal tax returns. A
References: Demand, F. O. (2011). Planning your business: research, goals, and business plans [Video file]. Retrieved from Films on Demand Digital Educational Video website: http://digital.films.com/PortalViewVideo.aspx?xtid=42248&loid=116024 Advantages and Disadvantages. (2014). Retrieved from http://www.how-to-start-a-business guide.com/partnership-advantages.html. Advantages and Disadvantages of Corporation Company. (2014). Retrieved from http://www.ebusinesstrainingmanitoba.com/advantages-and-disadvantages-of-corporation-company.