Organizational Forms
ORGANIZATIONAL FORMS
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The following is an explanation of six types of business models. I will explain the advantages and disadvantages, liability, incomes taxes, longevity, control, profit retention. Location and or convenience and burdens. In conclusion, the reader should have a clear understanding and overview of the six types of business forms.
SOLE PROPRIETORSHIP The overall benefits of a sole proprietorship are the flexibility and inexpensive way you can organize and control the company. The owner can create their own policy and procedures as long as they are with the parameters of the law. They receive all income generated by their business and can reinvest as they see fit.
Disadvantages
There are a few disadvantages sole owners can experience such as raising funds, use their own personal savings and acquiring debt through business loans. Obtaining and retaining high performing talent can be challenging due to sustainability of employment and medical benefits.
Income Taxes When filing income taxes as a sole proprietor you must use a Schedule C form along with Schedule SE and Form 1040. Taxes are paid on all profits of the business. Any money left in the account at the end of the year has to be reported and taxes must be paid the balance. Recording keeping is crucial as a sole proprietor. You can deduct expenses such as operating costs, travel, equipment and start-up costs. (Nolo, 2011). Self-employment taxes must be paid into Social Security and Medicare programs (the 2012 rate is 15.3%), though they have to pay 100%, they can deduct 50% on Schedule SE.
Longevity
“Sole Proprietorships are terminated upon the death of the proprietor. Until the business is assumed by a new owner the business remains a part of the deceased proprietor’s person’s estate.” (Bartschi, 2001, pg.21). Therefore, it is very important that the owner have legal documentation on how and what they would like to happen to their business should they become ill
Y
The following is an explanation of six types of business models. I will explain the advantages and disadvantages, liability, incomes taxes, longevity, control, profit retention. Location and or convenience and burdens. In conclusion, the reader should have a clear understanding and overview of the six types of business forms.
SOLE PROPRIETORSHIP The overall benefits of a sole proprietorship are the flexibility and inexpensive way you can organize and control the company. The owner can create their own policy and procedures as long as they are with the parameters of the law. They receive all income generated by their business and can reinvest as they see fit.
Disadvantages
There are a few disadvantages sole owners can experience such as raising funds, use their own personal savings and acquiring debt through business loans. Obtaining and retaining high performing talent can be challenging due to sustainability of employment and medical benefits.
Income Taxes When filing income taxes as a sole proprietor you must use a Schedule C form along with Schedule SE and Form 1040. Taxes are paid on all profits of the business. Any money left in the account at the end of the year has to be reported and taxes must be paid the balance. Recording keeping is crucial as a sole proprietor. You can deduct expenses such as operating costs, travel, equipment and start-up costs. (Nolo, 2011). Self-employment taxes must be paid into Social Security and Medicare programs (the 2012 rate is 15.3%), though they have to pay 100%, they can deduct 50% on Schedule SE.
Longevity
“Sole Proprietorships are terminated upon the death of the proprietor. Until the business is assumed by a new owner the business remains a part of the deceased proprietor’s person’s estate.” (Bartschi, 2001, pg.21). Therefore, it is very important that the owner have legal documentation on how and what they would like to happen to their business should they become ill
References: Nolo. (2011). How sole proprietorships are taxed. Retrieved from http://www.nolo.com/legal-encyclopedia/how-sole-proprietors-are-taxed-30292.html “Sole Proprietorships are terminated upon the death of the proprietor. Until the business is assumed by a new owner the business remains a part of the deceased proprietor’s person’s estate.” (Bartschi, 2001, pg 21) Clarkson, Cross, Jentz, Miller. (2008). Business law. Mason, Ohio: Cengage Learning HILL, G. & HILL K. 2008 (n.d.). Retrieved from http://legal-dictionary.thefreedictionary.com/limited partnership