1.What are the factors in deciding what form of ownership is best suited for the potential business?

-First thing to think about is what kind of business are we willing to run. In what sector is it going to be stablished, size of the business and future growths.

-When this is all decided, you need to know which is the best way to manage this bussines, would be a single person taking responsabilities, or a board of some members managing it.

-After that, I would jump into financiation asking if I am only going to financiate, or I will need co-owners to get more finance for business. Or might need financing from other sources as banks or shareholders.

2. Briefly describe the advantages and disadvanteges of a sole proprietorship and partnership.

-Sole Propietorship:

This is the simplest structure chosen to start a business. It is an unincorporated business owned and run by one person with no distinction between the business and you, the owner. You are entitled to all profits and are responsible for all your business.

Advantages:

• You are entitled to all profits and responsabilities.
• Low costs to run the business.
• Privacy.
• Legal structure easy to change if needed.
• Easy to close the business.

Disadvantages:

• Unlimitted liability, business debt and liabilities are yours also.
• Hard fund raise.
• High pressure of running a business by your own, not beeing able to relay in others.
• Business life it is limitted.

-Partnership:

This is business owned by two or more people. Each partner shares all the aspects of the business such as responsability, money, labor, profits or losses.

Advantages:

 

• Skills contribution to the business is greater than the skills a single person can contribute to a business.
• Easy and inexpensive stablish start-up.
• Better financial commitment.
• Partnership can be use to icentivate employees.

Disadvantages:

 

• Unlimited liability among the partners.
• Disagreements and friction among partners and management.
• Shared profits with shareholders.

3.Explain the corporate form of ownership and how a business is incorporated.

A corporation is a business or organization formed by a group of people, and it has rights and liabilities separate from those of the individuals involved.It may be a nonprofit organization engaged in activities for the public good, or a private corporation which has been organized to make a profit. A corporation has many of the same rights and responsibilities as a person. Some of the advantages are that it can exist indefinitely, beyond the lifetime of any one member or founder, and that it offers its owners the protection of limited personal liability.

 

4.List the differences between the S-corporation and the limited liability company.

• LLCs provide liability protection for their members, while S-Corp provides it for shareholders.
• S-Corp are not taxed while LLcs are.
• The management structure of S-Corp. is more rigid than the LLC´s is.
• S-Corps can sell stock so its easier to raise capital, while LLC can not.