Business Structures
Your Business Structure Video Sole-proprietorships are formed by entrepreneurs as a way to easily break into a small business and get up and running quickly. Advantages of this form of business come in the form of ease of startup because there are fewer legal preparations involved. The owner also has full control over all business decisions so decisions are made quicker and easier than with partnerships. However, with a sole-proprietorship, the owner is fully reliable for all capital debt. There are no separations from personal and business debts. Partnerships come in two forms; general partnerships and limited partnerships. The main differences between the two are that limited liability partnerships offer the protection that investors are only reliable up to their capital investment. Both forms of partnerships share the advantage that each partner is only taxed on their personal earnings and that each partner is only responsible for a portion of the debt. The disadvantage to a partnership is that there are more decision makers. Whenever a business decision is made, each party will have to agree to the terms before changes can be made. This also leads to lengthier startup times because there are requirements for lengthy legal contracts in many cases that help to protect each investor.
Corporate Business Structures Video There were several corporate business structures discussed in the video that includes, corporations, subchapter S corporations, and Limited Liability Corporations. The advantages of corporations are that business owners’ personal assets are protected in case the business fails. The disadvantage to this is that large corporations are often taxed first and also each partner is taxed again on their personal earnings from the business. Subchapter S Corporations however, have the advantage of being taxed as if it was a sole-proprietorship, where each partner is taxed individually on their earnings and still are offered the same
Corporate Business Structures Video There were several corporate business structures discussed in the video that includes, corporations, subchapter S corporations, and Limited Liability Corporations. The advantages of corporations are that business owners’ personal assets are protected in case the business fails. The disadvantage to this is that large corporations are often taxed first and also each partner is taxed again on their personal earnings from the business. Subchapter S Corporations however, have the advantage of being taxed as if it was a sole-proprietorship, where each partner is taxed individually on their earnings and still are offered the same
References: Parrino, R., Kidwell, D. S, & Bates, T. W. (2012). Fundamentals of Corporate Finance (2nd ed). Hoboken, NJ: Wiley