Business Forms Worksheet

Sole Proprietorship

Advantages

1. Easy to establish and to get rid of as there are no contracts, pacts or other lawful documents.
2. The proprietor has the willingness to turn into his own boss.
3. Profits made are personal income to the proprietor presenting him with great motivation to excel.

Disadvantages

1. Proprietor has unlimited liability as he individually has to cater for the debts suffered.
2. It is a challenge to come up with huge funds for the venture.
3. In case of demise or founded legally inept, the venture will basically fade away.

Summary

Sole proprietorship is a type of business that is run by only one person. Even though, this kind of businesses have numerous workers, in some instances, they are small-scale. It is the easiest as well as laid-back kind of business to establish as it requires less funds. In many instances, sole proprietor would opt to operate certain venture and do so instantly. This kind of venture is mostly associated in services, retailing as well as agricultural businesses. These sole proprietorship ventures incorporate; the TV repair shops, clothing boutiques, barbershops, corner grocery as well as small independent farmers.

Partnership

Advantages

1. Easy to establish as there are little legal documents.
2. Pliability of running.
3. Well-matched for an expert.

Disadvantages

1. Limited starting fund.
2. Unlimited to the associates for the debts of the partnership.
3. Unlimited life.

Summary

Partnership is a voluntary connection of two or more individuals who merge to act as co-owners of a business for profit. The co-owners act as associates, as well as subsidize funds for the start-up of the business. The type of business has contribution partners categorized into capitalist partner, industrial partner, as well as industrial capitalist partner. The capitalist partner provides his contribution in form of money for the capital of the business, the industrial partner offers contribution to the venture as labor necessary for the running of the business, and the industrial capitalist partner offers both money and labor contribution to the venture to get started as well as continue running.

Limited Liability Partnership

Advantages

1. Security from personal legal responsibility for partnership debt and obligations.
2. Partnerships are not subject to federal income taxation.
3. Partners have no personal liability for the debts and responsibilities of the business.

Disadvantages

1. Formalities, and also regulatory and reporting necessities.
2. Legal and organizational expenses are normally greater than general partnership.
3. Lack of case law and regularity may lead to some vagueness with this fresh type of entity.

Summary

Limited Liability Partnership is a kind of business intended for experts who typically pursue business in a partnership. This business must be established as well as run meeting the requirements of the state laws and statues. An apt form must be filled by the associates with a central agency, which is typically the secretary of the state’s working place, and the ventures name must incorporate either “Limited Liability Partnership” or “LLP’. It lets associates to rejoice in taxation merits of a partnership whereas restricting their personal liabilities for the misconduct of the associates. It fails to offer a partner who funded the business running as well as the administration.

S Corporation

Advantages

1. Limited liability.
2. Single level of taxation.
3. Corporate losses flow to stakeholders.

Disadvantages

1. A number of limitation are present on the kind as well as the number of stakeholders.
2. Can be an issue to taxation on excess passive investment revenue and built-in gains.
3. Stakeholders may be levied on marginal merits obtained from the company.

Summary

This is kind where stakeholders report the company’s easy to levy earnings or loss on their own tax return in a way connected to that of partnerships as well as associates. Subchapter S of the Internal Revenue Code (Code) manages it. The S corporation, unlike regular or ‘C’ corporation, will at large not be a subject to taxation at the federal stage. Therefore, S Corporations evade the widely known double taxation of business earnings, especially, when the business level as well as earnings in the kind of a dividend are paid, it upkeeps the nontax, legitimate and workable merits of business status.

Limited Liability Company (including the single member LLC)

Advantages

1. It is easy to get funds.
2. Limited liability of stockholders.
3. Ownership transfer is easy without impacting operations.

Disadvantages

1. Double taxation as corporations are obligated to make tax payments annually.
2. Greatly controlled.
3. Danger of takeover or loss of power.

Summary

This is a merged body, which blends features of a company and partnership bodies. It is a company established under the state law, one that is suitably organized as well as run. It protects the proprietors of the LLC (known as “Members”), and the administration (who may be the members or “managers”) from the individual liabilities for the liabilities as well as debt of the LLC. The Limited Liability Company nevertheless, is the newest addition to the laws of majority of states in the U.S until 1990; only Wyoming (1977) and Florida (1982) had ratified the creation of LLCs in their U.S. A Single Member Liability Company is an LLC for an individual.

Franchise

Advantages

1. Business proprietorship.
2. The monetary power of immediate name acknowledgement.
3. Lessening danger of failure.

Disadvantages

1. The high cost of buying, in addition to the partial expense.
2. The necessity to adhere to the limiting franchise contract.
3. Sharing the contemporary corporation’s image when everything is not well.

Summary

Franchise is a predetermined licensing and sharing arrangement between two businesses whereby the franchiser (the owner of the business concept) offers the franchisee (another businessperson) the freedom to own as well as run a corporate in relation to the concept. Franchisees get funds from another corporate capitalist’s feat as well as remunerate for his or her knowledge. As a result, if deprived of knowledge as well as skill to establish a venture from nowhere, purchasing a franchise is the other option. The diverse kinds of franchise include; product and trade name franchise engaging the allocation of commodity via a dealer, as well as the whole business design or turnkey package.

Corporation

Advantages

1. Limited liability.
2. It is easy to get capital
3. Simplicity of business transfer.

Disadvantages

1. The challenge of cost creation.
2. State rule as well as surged documentation.
3. Devoid of discretion.

 Summary

This is a kind of venture whereby shareholders (persons who own a corporation stock) purchase stake (the shares of ownership of a corporation). It is established with majority of the legal rights of a real individual incorporating the right to startup as well as run a corporate, to purchase or sell commodity, to lend fund, to take legal action or get indicted, as well as to join into binding agreements. The moment the company has been established, shareholders are entitled to sell take to people or other corporations that want to place money in the company. It may provide stock as a remuneration to core workers to cover certain services.