Business Structure Advice

In: Business and Management

Submitted By didimarie
Words 635
Pages 3
Business Structure Advice
ECO/561
June 11, 2015

Business Structure Advice
Mr. Owner,
My office received your request for advice on how to start forming your business. In response to your request, our hope is that you will find the following information helpful in the beginning stages of your business venture.
To begin, it is imperative for business owners to decide which structure will work best for their company. However, one must first know their business structure options, as they can affect financial and legal liability, decision-making authority, and likely tax consequences. The possible structures of a business can be either a sole-proprietorship, partnership or a part of a corporation.
A sole proprietorship is the easiest of all the structures. Should you decide to become a sole proprietor you would have complete control of the business and full authority over all business decisions. However, as the sole owner you would also be liable for any and all debts, losses, and other liabilities incurred. According to the U.S. Small Business Administration (n.d. a), “Because you and your business are one and the same, the business itself is not taxed separately-the sole proprietorship income is your income” (para. 5). This makes for easy tax preparation in addition to the benefit of having low tax rates.
A partnership involves two or more individuals who have chosen to cooperatively operate and manage a business focused on developed agreements. It can be inexpensive and also essential to business success, because it is a shared commitment where individuals involved contribute money, property, labor or skill (U.S. Small Business Administration, n.d. b). However, a downside to this structure is that partnerships retain full liability among owners (U.S. Small Business Administration (n.d. b). So, if you or a partner makes a decision which affects the…...

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