Bull's Memorandum

Bull’s Memorandum

Sharon Nakken

PA202: Business Organizations

Prof: Ramona Atkins

Kaplan University

February 1, 2014

MEMORANDUM

January 30, 2014

To: Attorney Phil Collins

From: Sharon Nakken

RE: Advantages and Disadvantages of Operating Various Business Types

The objective of this memorandum is to describe the differences between a sole proprietorship, a partnership, and a corporation. Furthermore, information in connection with the various advantages and disadvantages of operating a business as a sole proprietorship, a partnership, and a corporation will be discussed.

A sole proprietorship is a business that is unincorporated and owned by one person. That person is known as the sole proprietor. The sole proprietorship is considered a continuation of the owner and not a separate entity. This means that the sole proprietor is entitled to all of the profits of the sole proprietorship, and in turn, is responsible for all its debts and obligations. (Schneeman, 2002)

There are advantages and disadvantages of a sole proprietorship. One of the advantages is the ease of setting up the business. All that is needed is a license or permit and you must register the business with your local government. Otherwise the sole proprietorship is essentially unencumbered by government rules or regulations. The business is yours to run as you see fit. There are no partners in which to confer. Each and every decision is yours to make. Another advantage is not having to file taxes separately for the business, and therefore, you don’t need to prepare a company balance sheet. (Beesley, 2013)

One of the biggest disadvantages of a sole proprietorship deals with liability. As a sole proprietor you are personally responsible for your business’s debts and obligations. Another disadvantage is banks don’t like to loan money to a business that is not incorporated. That means, in most circumstances, you must come up with the money to start your business...