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

According to our text there is no way of deciding what the is best form of ownership for a business.  You can prepare to do so by asking yourself the the following questions:

1. How big can the business become?  (Do you see it becoming a franchise? Maybe a corporation is best)
2. How much control do you need in the decision making process of the company? Are you willing to share ideas and the business’s potential profits with others who can help build a more successful business?  (If you want to make a decision on everything fast and up to only you maybe a sole proprietorship is better)
3. How much capital is needed to start a business? (Need more capital? Maybe a sole proprietorship isn’t best)
4. What tax considerations are important? What sources of income are there, and how they are sheltered?
5. In case of failure, to what extent are you willing to be personally responsible for debts created by the business? (Want all the debt to fall on the business and not be liable? pick a corporation)
6. Is it important that the business continues in case of owner incapacity or death?
7. Who will be the sole or major beneficiary of the business success? Is the owner the type of person who doesn’t mind taking all the risk but expects to reap all the benefits if successful?
8. Can you put up with the the time consuming bureaucratic red tape associated with more complicated form of ownership? what is your emotional reaction to government regulations and their accompanying paperwork requirements?

Based on how you answer these questions based on the business that you would like to start you will be able to decide which is one of the better forms of ownership for your company.

 

 

2. Any form of business has its advantages and and disadvantages. Below is a table where you can see two forms of ownership with their advantages and disadvantages.

(sorry for is being a little blurry it was made on word and then created into an image)

 

 

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

A corporation(according to ,www.sba.gov ) is an independent legal entity owned by shareholders. This means that the corporation itself, not the shareholders that own it, is held legally liable for the actions and debts the business incurs.

Steps to incorporate a business,

1. Select a name an see if it is available
2. Establish presence on the internet, contact suppliers, file paperwork, obtain insurance,
3. Federal tax forms, state tax forms, pay corporate tax or state tax, secure first round of capital, and establish relationships with the bank
4. Select an attorney
5. Select an accountant
6. Name registration
7. Get a FEIN
8. Make sure all insurance issues are resolved

 

 

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

While there are many things that I could say there are differences about, I have listed just a few below:

– In s-corporations owners pay some of the taxes when but in  LLC the corporation cays all of it.

– In corporations statutory meetings aren’t required

– There is no limit in LLC on the amount of owners and if the shareholders are domestic.

– A LLC cannot be taken public