Forms of Business Ownership BY CATHERINE BLAIR Forms

Forms of Business Ownership BY: CATHERINE BLAIR

Forms of. Business Ownership 1. Sole Proprietorship 2. Partnership 3. Corporation Limited 4. Liability Company

Sole Proprietorship Owners One person owns the business Length of Life It is Easy to start a business. All you have to do is get a business license and than you can start your business Liability The owner is responsible for every debt that the business has and the employers Creditors are able to forclose the owner’s property

Sole Proprietorship Length of Life The proprietorship’s life is the life of the owner If the owner dies the business ends, or passed off to someone the owner picks to hand the business to Taxes The business is taxed at the owner’s tax rate

Partnership Owners Two or more people make a partnership Ease of Entry Its easy to start a partnership you just need 2 people All you have to do is agree with your partners, get a business license, and start the business Liability Each partner is responsible for all of the debt on their part of the partnership Creditors can take the property of any of the partners if they don’t pay the debts

Partnership Length of Life The proprietorship’s life is limited to the life of any one partner. When a partner dies or leaves the partnership, it becomes a different business entity Taxes Each partner is taxed their own tax rate based on their portion of the taxable income of the partnership

Corporation Owners Corporations can have only a few owners or millions. Corporations issue partial ownership through the sale of stock Ease of Entry Must be chartered through the state where they conduct business This entails filing paper with the Secretary of State, publishing the formation of the corporation in the newspaper, and paying certain fees Liability A corporation is responsible for its own debts. If it cannot pay those debts, the creditor cannot go against the personal assets of the owners.

Corporation Length of Life Corporations enjoy an unlimited life Even if one of the owners dies, the corporation remains intact and ownership is passed to the deceased owner’s heirs. Taxes Corporation profits are taxed once when earned by the corporation AND again when divided among the owners in the form of a dividend

Limited Liability Company Owners LLCs can have from one owner to many owners Ease of Entry LLC should be established with the Secretary of State in the state where they conduct business Liability Members of an LLC have same protection from the debt of the company Creditors cannot go against the personal assets of the owners.

Limited Liability Company Length of Life Limited to the life of any of the owners. If one owner dies, the LLC becomes a different business entity Taxes Like a partnership, each owner is taxed on their portion of the LLC income.