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Forms of Business

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Forms of Business
Lurene Flynn
Law/531
October 24, 2011
Christine J. Benway, J.D. Instructor

Forms of Business Determining the type of business to open is very important in order to know the business form that will be used. Knowing the business structure is important because it determines how the business income will be taxed. This paper will discuss the different forms of business, give examples of each form, and justify why the corresponding business form is preferred. Sole proprietorship according to Cheeseman (2010) is the form of business in which the owner is actually the business: the business is not a separate legal entity (Cheeseman, 2010, p. 530). “An individual starts the business in his or her own name and does not require any special legal organization beyond the normal requirements such as licenses or permits” (Georgia Trend, 2006/2007, p. 34). Beauticians are great examples of a sole proprietorship. Beauty shops are usually owned by one person, while having other people working in them.This type of business form is preferred by beauticians or a plumber because it is easy, no formalities, and most importantly no federal or state government approval is required. According to Cheeseman (2010) the owner has the right to make all management decisions concerning the business, including those involving hiring and firing employees (Cheeseman, 2010, p. 530). A sole proprietor owns all off the business therefore he or she receives all of the profits. Most importantly if the sole proprietor wishes to sell or transfer the business no other approval is necessary (Cheeseman, 2010). Partnerships are a business form that consist of two or more people coming together to form a business. Each person contributes money, property, labor or skill, and shares in the profits and losses of the business (Georgia Trend, 2006/2007).

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