Week one: Business Structure
Week one: Business Structure
When one wants to begin a business it is imperative for the member to make a decision
on the appropriate business structure to meet the needs of the company. There four business
structures to include sole proprietorship, partnership, limited liability company, and corporation.
This paper identifies each business structure advantageous and disadvantages.
Advantages and Disadvantages of a Business Structure
Sole Proprietorship
Sole proprietorship contains an elevated level of independence for the owner in this
business structure. Another advantage of sole proprietorship business structure holds fluid
movement of company funds as well as low legal governance (Parrino, Kidwell, & Bates,
Chapter 1, 2012). The main disadvantage of this business structure is the owner takes sole
responsibility of all debts incurred (Parrino, Kidwell, & Bates, Chapter 1, 2012).
Partnership
Partnership business structures distribute the responsibility of the company’s
management. A major advantage of a partnership structure is the ability for each partner to evade
a business tax income requirement (Parrino, Kidwell, & Bates, Chapter 1, 2012). Each partner
files their own gains and loss on their respective tax return. The disadvantage of partnership
business structure is that any debt that is not covered by the business, a debt collector may
collect through personal property (Parrino, Kidwell, & Bates, Chapter 1, 2012).
Limited Liability Company (LLC)
A limited liability company is a mixture of business’s that present members with limited
legal responsibility security from company debts...