Business structures By Amanda Cowell Sole Proprietorship Definition

Business structures By: Amanda Cowell

Sole Proprietorship Definition: unincorporated business owned and run by a single person who has rights to all profits and unlimited liability for all debts of the firm. Sole Proprietorship is the simplest and most common to start. In a sole proprietorship, you have complete control over all and any decisions, you don’t have to talk to anybody else about the final decisions. In a sole proprietorship, it is hard to make any money, because you can’t sell stock and investors will not invest. Although you have all the control, all the pressure is upon you and you are responsible for any and all failures.

Limited Liability Company Definition: A hybrid type of legal business structure that provides all the limited liability of a corporation and all the tax efficiencies of a partnership. Owners are known as the members. Members are protected from any personal liability and when it happens they are eligible to exempt. There’s less paperwork to keep track of. Members get to share profits. Members are considered self-employed so they must pay the self-employee taxes.

Cooperative Definition: nonprofit association preforming some kind of economic activity for the benefit of it’s members Cooperatives are common in healthcare, retail, agriculture, art and restaurant industries. Cooperatives can get discounts on supplies and other products, suppliers most of the time have better products. A disadvantage is that members don’t really participate well or preform their duties

Corporation Definition: form of business organization recognized by law as a separate legal entity with all the rights and responsibilities of an individual. Corporations are more complex to start because they have more costly administrations. They have the ability to hire and train high quality employees and motivators because they have more ownership towards stocks. Time and money and double taxing are disadvantages because if they make a profit again and again they need to take taxes from that, and there are time consuming projects that use up money and your time.

Partnership Definition: unincorporated business owned and operated by two or more people who share the profits and have unlimited liability for the debts and obligations of the firm; same as general partnership. Each partner contributes in money, property, labor or skill. A document is shared between the partnership and in it and is told how the future business decisions will be made. Partnerships are not very expensive at all. Partnerships are good because after a while you can tell a lot about the person and you can see their strengths and weaknesses. A disadvantage is when one partner disagrees with another partner and they get into a whole fight and the project or expenses don’t get done or paid.

S corporation Definition: created through an IRS tax election. Some eligible corporations are able to avoid double taxation. The difference between S corp and C corp is that the profits and losses are passed through the personal tax returns. In a S corp, you get to save on you’re taxes and so does your business. Also it allows it to have an independent life. Although this happens, you have a more strict business because they have scheduled shareholders.