Acc 561 Week 2 Paper

1305 Words Mar 20th, 2012 6 Pages
Running Head: Four Types of Business

Brandon Mckinley

University of Phoenix


Introduction An Entrepreneur is a person who forms and operates a business. Entrepreneurs form and start companies by themselves, or with partners. Most of the time companies which are started by entrepreneurs are relatively small in size, but some grow into huge corporations, such as Microsoft which is owned by Bill Gates. Entrepreneurs have four different options when starting a business, which include a sole proprietorship, Partnership, limited liability company, and also a corporation. Each form has its advantages and also disadvantages depending on what the type of business is, and also what service it provides.

Sole Proprietorship
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Other advantages of corporations include that they have a ranking of officers that run the company from the CEO, to the CFO and down to the next chief officer. Also, corporations are taxed at the corporate level using corporate income tax rates filed under the form 1120. Another advantage of a corporation is that if a corporation becomes insolvent, its owners and shareholders will not be liable beyond their equity investments in the corporation – creditors cannot go after the stockholders’ personal assets to exhaust their debts.(Advantages, 2009) One of the last advantages of a corporation is that if they are publicly traded, shareholders are able to sale their stock through stockbrokers. Disadvantages of corporations include that sometimes they are double taxed. If dividends are paid out from the corporation to stockholders, then those stockholders are taxed on their personal income tax returns also. The last disadvantage is that since it is managed by chief officers, stockholders are not able to make any managerial decisions as far as the company is concerned.

Limited Liability Company The last of the four types includes the limited liability company, also known as a LLC. An LLC is an unincorporated form of business that carries characteristics of all of the other three forms of business. An LLC can choose to be taxed as a partnership, the owners can manage the business, and the owners have limited liability for debts and obligations of the partnership. LLC’s are

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