• WHAT ARE THE FACTORS IN DECIDING WHAT FORM OF OWNERSHIP IS BEST SUITED FOR THE POTENTIAL BUSINESS?

There are several factors that need to be considered when deciding what form of ownership is right for a business. Some of these important factors are:  how many owners the business will have, what kind of product or service will be provided, the capital that will be needed to start the business, the financial situation in general, and also what sources of income there will be.

 

• BRIEFLY DESCRIBE THE ADVANTAGES AND DISADVANTAGES OF A SOLE PROPRIERTORSHIP AND PARTNERSHIP.

There are some advantages and disadvantages for both a sole proprietorship and partnership. A sole proprietorship is a very simple type of business structure; an advantage is that it is easy to start compared to a partnership since it is only owned and managed by the same person. Unlike a sole proprietorship, a partnership is owned by more than one person and can be more complex.  A sole proprietorship is required to do some filing, but these filings are not as complex as and the requirements set up for a partnership.  Another advantage of a sole proprietorship is that the owner of the business can report the business income and expenses as his/her own individual tax return, and all the profit that is made does not have to be share, it is only collected by the owner. A disadvantage, however, is that a sole proprietorship can be very risky because having a business is a lot of responsibility and if the business is sued, then the owner will be sued too, if the business goes bankruptcy the owner will be the only and most affected one too because since there is no separation between the owner and the business, if the business goes bankruptcy, the owner will too.

 

• EXPLAIN THE CORPORATE FORM OF OWNERSHIP AND HOW A BUSINESS IS INCORPORATED

The form of ownership in a corporation consists in that the business is declared separate, legal entity and it incorporated and guided by a group of officers known as the board directors.

 

• LIST THE DIFFERENCES BETWEEN THE S-CORPORATION AND THE LIMITED LIABILITY COMPANY.

Some of the differences between the s-corporation and the limited liability company are:  In a S-Corporation the ownership is restricted by the IRS, and they can have directors and officers, whereas, in a LLC, owners can choose whether to have managers manage the corporation.  S-corporation can sell stocks while the LLC can’t; and also unlike the LLC, the S- corporation can be transferable as long as the IRS ownership restrictions are met.