The Best Form of Business
Wilbert McRae
LAWP/531
June 2, 2013
Instructor: Laurie Wicker
Abstract
Everyone wants to own his/her own business in some shape, form of fashion. The problem is trying to figure out what form of business to venture into. There are a number of forms of business to look into such as sole proprietorship, partnership, limited liability partnership, limited liability company, S corporation, franchise, and corporate. To choose the right form of business the individual or individuals need to know exactly what he/she are trying to accomplish or gain once the business gets off the ground. As a business owner there are certain procedures that are followed, licenses, laws of the state, tax rate determinations and so on, depending on the form of business started.
The Best Form of Business
Consider each of the following forms of business: sole proprietorship, partnership, limited liability partnership, limited liability company, S corporation, franchise, and corporate form. Develop scenario’s in which each of these forms of business would be the preferred form. For each scenario, justify why the corresponding business form is preferred.
Sole Proprietorship
Ann is a business owner running a small hamburger stand. Ann is a sole proprietor with three employees on the payroll. Business and personal transactions are conducted in Ann’s name along with the registration, license, contracts, and checks. Ann makes the decisions concerning the business. Ann is solely responsible for any debt incurred by the business and at times may have to come out of her own pocket to cover a debt. This type of business allows Ann to pay personal debt out of the business assets.
The amount of formalities are minimal, and it allows Ann to mix personal and business transactions together. Ann is liable for debts, liabilities, and losses. She must also pay into unemployment benefits for the employees on the payroll.
Partnership
David and Betty decided to go...