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Legal Forms of Business

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Legal Forms of Business

Introduction The different forms of business include sole proprietorship, partnership, limited liability company, S corporation, franchise and corporate form. However, depending on the type of business and the number of individuals involved in starting the business can determine what the best form of business to suit the organization. The advantages and the disadvantages must be weighed and thought out carefully in order to minimize risks and possible litigation issues that could arise.
A sole proprietorship is the most basic business form and is frequently utilized by a single person owning or running a business on his or her own. Such business enterprises are often run from the person's home. Owners pay taxes on the business profits and this is reflected on individual tax returns (Form 1040 and Schedules C and E). In some states, the costs of a business that is being operated from an individual's home may be deducted from income taxes. However, at the same time, certain counties and states may require a sole proprietor to pay property taxes on the value of any office equipment used for the business. In addition to tax liabilities, sole proprietors are also responsible for the debts of the business (Types of Business Organizations, 2008)
If an individual wanting to begin a small mobile food cart business forming a sole proprietorship may be the best alternative. The sole proprietorship business form for the individual would not need the normal formalities or any cost attached for the set-up of a sole proprietorship. The approval of the state or federal government to start a sole proprietorship is not required. However licensing in the city the sole proprietorship doing business in may require a license. If the individual choose to sell or transfer the business the sole proprietorship makes this transaction

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