Forms of Business

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Forms of Business Introduction One of the most common challenges that all businesses are facing is determining the form of organization they will utilize. This is because there are different financial / tax implications, liability issues and other challenges that must be taken into account during the process. The results are that various types of establishments are used. To fully understand what is taking place requires comparing different forms with another and the scenarios for each one. This will be accomplished by looking at: sole proprietorships, partnerships, limited liability partnerships, limited liability companies, S corporations, franchises and corporations. Together, these different elements will illustrate the circumstances when each of these entities is utilized and long term benefits they can provide stakeholders. Sole Proprietorship The sole proprietorship is an unincorporated business where the owner will pay taxes on all income that is received from the firm. They will assume any legal and financial responsibilities that are incurred during this process. The biggest advantages are that very little paperwork is needed to begin operations (most notably: state and local tax / business licenses). The largest drawback is the owner is responsible for all debts of the firm. ("Sole Proprietorship," 2012) For instance, an individual wants to start a small business (such as: independent contractor). These are people who want to maintain control of their

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