Fin 571 Week 1

Business Structures

Student name

FIN/571

September 28, 2014

Marcel Santiz

Business Structures

Business structures are important in how a business will function. When starting, people who are thinking about going into business at some level need to have an understanding of business structures. Organizational structure is a decision that is needed for making important decisions. “Most companies either have a tall or flat organizational structure. Small companies usually use a flat organizational structure” (Suttle, n.d). So why would each business structure be good or and might not be advantageous?

Sole proprietorship in business structure the sole owner of your business and handles the business accruing debts the business may gain. Advantages of being the only owner are less money to start the business, and the all of the profits is the owners. The decision-making is done by the owner and risks are all in the owner’s judgment only. Disadvantages would be a loan of money by banks won’t have enough equity or assets and a higher risk of loss of profits.

Corporation business structure is controlled by stakeholders. Advantages structure have limited liability, raising capital is easier, and transfer ownership to the employee or public stock through the stock market. Corp S corporation is a structure with hybrid letting user benefits to be combined as a partnership in a corporation. The structure gives users tax benefits in a sole proprietorship with the limited liability and time of working in life span that corporations can have because ownership can be transferred easily with the sale of stock. Benefits for a business structure are the tax benefits and potential extended life of doing business. The disadvantages would be that this type of structure has stricter operational processes and stakeholder compensation requirements. As per our text, please review the comparison chart below of Sole Proprietorship, Partnership, LLC, and Corporation...