Optimizing Finance Business Structure

Optimizing Finance Business Structure

  • Submitted By: ferbut
  • Date Submitted: 03/06/2009 12:34 AM
  • Category: Business
  • Words: 2863
  • Page: 12
  • Views: 596


Business Structure:
The purpose of a firm is to maximize the wealth of its owners.
Business structure is an organizational framework legally recognized in a particular jurisdiction for conducting commercial activities. There are 3 basic legal business structures that entities take on in the U.S.
1. Proprietorships (business owned by an individual)
2. Partnerships (general or limited partners). General (active) partners have unlimited liability for all business debts. Limited partners are shielded to the extent of their investment
3. Corporations (legal entities that are separate from the individuals who own them)

|Characteristics |Sole Proprietorship |C |S |Limited Liability Company |
| | |Corporation |Corporation | |
|Formation |No state filing required. |State filing required. |State filing required. |State filing required. |
|Duration of Existence |Dissolved if entity ceases |Perpetual |Perpetual |Dependent on the requirements |
| |doing business or upon death | | |imposed by the state of formation.|
| |of the sole proprietor. | | | |
|Liability |Unlimited liability. |Shareholders are typically not |Shareholders are typically |Members are not typically liable |
| | |responsible for the debts of the |not responsible for the debts|for the debts of the LLC. |
| | |corporation....

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