Legal Forms of Business

Legal Forms of Business

LAW/531 Business Law

University of Phoenix

Professor Kenneth Goldsmith

Michelle Melville

April 15, 2013

Legal Forms of Business

When making the decision to start up a business there are some issues that should be considered by the individual or entrepreneur as this individual is called. The entrepreneur is someone who forms as well as operates a business either on his or her own or in partnership with one or more individuals. In this paper, the different forms of businesses will be identified, the different scenario that will determine which form of business the individual should use, and a justification for the use of the particular form of business. The forms of business identified will include the Sole Proprietorship, Partnership, Limited Liability Partnership, Limited Liability Company, S Corporation, and Corporations. In determining the different scenarios, the legal considerations of each form of business will be taken into consideration.

Sole Proprietorship

An individual decides that he or she wants to start up an interior designing business with minimal fuss. The perfect choice for this individual is the sole proprietorship. This form of business is owned solely by the individual starting up the business. The only legal requirement for this business form is licensure. Formation of the sole proprietorship is both easy and inexpensive. All business decisions are made by the owner. If or when the individual decides he or she is no longer interested in having the business, he or she can easily transfer ownership or sell the business with no legal entanglements.

Even though the sole proprietorship’s owner may lose if the business happens to fail or if anyone decides to file a claim against the owner for recoupment of losses, the owner of a sole proprietorship enjoys all the benefits of the successful business. In addition, the sole proprietorship is not separate from the owner. This means for tax...