Business Ownership

By: Pilar Salazar

Sole Proprietorship

Along with the pros and cons of a sole proprietorship as shown in the video, there are also rules. For example , they have to have federal and state licenses/permits depending on the business, file tax forms,and pay any taxes due. The sole proprietorship ends with the death of the proprietor. Examples of sole proprietorship are landscapers, tutors, or financial planners.
Sole proprietorship (Ytube).mp4

Partnership

A partnership is a business between two or more people who share the management and profits of the business. Some of the advantages of a partnership are: the start up costs are low, more capital is available for the business, you have a larger borrowing capacity, and there is an oppurtunity for income splitting. Some of the disadvantages of a partnership are: sometimes partners might have disagreements, each partner is liable for the other partner's actions and debts, and if a partner joins/leaves valuing the partnership assets can be costly. The link below is an exapmle of one company's business partnership policies. To have a partnership you have to agree on a business name and should have a partnership agreement. Partnerships are found in a lot of legal firms and real estate offices.

Limited Liability Partnership

A limited liability partnership provides all of its owners with limited personal liability. With a LLP, you get the advantages of liability protection, flexibility, and being liable for filing personal income taxes, self-employment taxes and estimated taxes for yourself. Some disadvantages are that is that individual partners are not obligated to consult with other participants in certain business agreements, some states recognize you as a nonpartnership for tax purposes, and in some states LLPs are not recognized as legal business structures. An individual in a LLP is recognized as an employee for tax purposes. Examples of a LLP are large legal and accounting firms, organizations made of doctors and healthcare professionals, or venture capital and similar investment funds.

Corporation

A corporation is an independent legal entity owned by shareholders. Adavantages of a corporation include limited liability, ability to generate capital, it looks attractive to potential employees, and being able to file taxes seperately from the owner. The disadvantages are that they are time consuming and costly to start up, can sometimes be taxed twice, and they are required to do extra paperwork.