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Business Organization Forms

In: Business and Management

Submitted By gardnerseth
Words 1353
Pages 6
ACC 561
Jared Jones Forms of Business Organization
Introduction
There are four ways that a business can organize itself. The owners and partners in this newly formed business may share in a variety of responsibilities and must decide which form their business should take on. The four basic ways a business can be organized is a sole proprietorship, partnership, C corporation and S corporation. There are a variety of advantages and disadvantages to each. When it comes to Tax implications, Legal implications and Accounting implications this is especially true. Below is an analysis of the various forms of business and the advantages and disadvantages to each, along with various implications associated with taxes, legality, and accounting.

Sole Proprietorship
Sole Proprietorship is a type of business run by a lone individual. This individual owns the business, and deals solely with all of the losses and all of the profits. The owner also is responsible for all of the liability and has complete control of business operations (Carr, 2011). Typically the business will have an income statement and a balance sheet. The owner through personal income tax return pays all taxes for the business. There are several advantages to this form of business: It is generally not difficult to organize due the requirements of registration not being as harsh to abide to and the financial capital is relatively small. Also, the sole owner has the ability to make all decision for the company and is free to act in virtually any manor they wish. This cuts down on conflict. The owner has added incentive to make the business grow because he acquires all profits. There are also several disadvantages: Resources financially are typically substantially less than desired to take the business to the next level or to a larger customer base. Because of its likely quick demise and small assets...

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