Business Ownerships
Below, are the 4 types compared.
Sole Proprietorship
Definition:
-There is one owner
-No legal difference between company and owner
Advantages:
-Easy to set up
-Little paperwork
Disadvantages:
-Lots of risks for the owner
Policies/Regulations:
-File tax forms to Internal Revenue service
-Pay due taxes
-Personal income tax
-Schedule C
-Schedule SE
-Schedule ES
Facts:
-The owner may engage in anything at any time
-If the spouse works in the company but is not a partner or an independent contractor, the company is still considered a sole proprietorship
Examples:
-Book Keeping
-Home Healthcare
-Financial Planner
-Landscaper
-Computer Repair service
-Catering company
-Housecleaning service
-Freelance writer
-tutoring
-virtual assistant
Partnership
Definition:
-One business is run by two or more people who are involved in all aspects of the business
Advantages:
-Easy to set up
-cheaper
-Little paperwork
Disadvantages:
-Liability of business debts is unlimited
-Each partner is responsible for their debts as well as the company's
-Disagreements
Policies/Regulations:
-Deficit Reduction Act
-GAO Report
-Long-term care insurance
Facts:
-Two different types of partnership: Limited & General
-Limited means that only one person is at risk whereas in General, both have much to lose
Examples:
-Warner Bros.
-Hewlett Packard
-McDonalds
-Microsoft
-Apple Inc.
-Ben & Jerry's
Limited Liability Partnership (LLP)
Definition:
-Some or all of the partners have Limited partnership
- It is a mix of a Corporation and a Limited Partnership
Advantages:
-Asset protection
-Liability protection
-Lower audit rate
-Raise capital
-Tax benefits
-Separate credit
Disadvantages:
-Not recognized as an actual business structure in every state
-Special taxes
-Individual partners do not have to collaborate
Policies/Regulations:
-Public Utility Holding Company Act
Facts:
-Must be authorized by the state
-Pays a franchise tax
Examples
-Ernst & Young (E&Y)
-PricewaterhouseCoopers
-Deloitte & Touche
-KPMG
-Cooper Christensen Law Firm
-Bassett Law Firm
-Fischer Law Firm
-Hogan Lovells US
Corporation
Definition:
-Company or group of people authorized to act as a single entity and recognized as such in the law
Advantages:
-Asset Protection
-Liability Protection
-Lower audit rate
-Raise capital
-Tax benefit
-Separate credit
Disadvantages:
-Double taxation
-Excessive tax filings
-Independent management
Policies/Regulations:
-Domestic Volunteer and service act of 1973
-National and Community service Trust act 1933
-Social media
Facts:
-Get started through a promoter
-Starts off by getting proper loans
Examples:
-7 Eleven
-ABC
-Adidas
-AMECO
-CBS
-Burger King
-Clorox