Business Organization

There are six key forms of a business organization to look at and consider before beginning any type of business. To be successful, it is critical to know the main characteristics of these forms of business as well as the advantages and disadvantages of each. Knowing this pertinent information will help you decide which one would be best suited for your needs.

1) Sole Proprietorship

The wonderful thing about a sole proprietorship is that they are simple to form because you are the one and only owner of the business. There is no legal difference between the owner and the business. You are ultimately in charge of making all decisions and handling all finances.

• Liability: In a sole proprietorship, the owner, is the same as the business. The owner is held responsible for all of the liability as a business owner and personally. Any personal or business assets as well as future business earning can all be a part of the risk of being a sole proprietor.

• Income Taxes: When it comes to income taxes, all earnings of the business are reported under the sole proprietor as personal income, which tends to suffer the maximum taxation amount. The business is not taxed separately from the individual since they are essentially the same entity.

• Longevity/Continuity: In a sole proprietorship, the business would cease to exist without the original owner. The business can also cease to exist by selling off or donating any of the business assets.

• Control: The owner has complete control of the business. They are ultimately responsible for every single decision, finance and detail of the business.

• Profit Retention: Any profit or loss of the company belongs solely to the owner. The owner can keep any profit from the business as their own and spend it accordingly.

• Location: Sole proprietorships can be operated from anyplace. They must, however, provide legal business documentation if they decide to sell any type of materials or services...