To start your business you need to verify and determined some crucial decisions at first. First of all choose the products or services to sell, the markets to sell them and the superior strategies for selling them. How to raise the money to develop your idea with the products and services, acquire all necessary assets and hire the right staff. It is important to be careful and realistic in assessing the opportunities. Don’t overanalyze the opportunities to the point you don’t want to proceed. Many successful entrepreneurs had failed before maybe more than once in their careers but they had learned from their mistakes and used it for the success of their business. Another imperative decision is to decide which form of organization will work best for your business and what are the pros and the cons for each of them. The basic forms of organization are the sole proprietor, partnership and corporations.
Sole proprietorship can be the least expensive type of business structure to start because to start this all you need is a license from local or state government. They can have fewer regulations and all the profits stay with the owner. On this business the tax treatment is flow through but the tax deductibility of owner benefits is limited. The major disadvantage is the owner has all the personal liability and because the whole business depends on the owner’s capital then if the proprietor gets out of business the business cease to exist. Normally limited partnership cost more to form because the partners need to hire an attorney to prepare and maintain the partnership agreement. The liability of the limited partners on the partnership debt is limited to the amount of property or money that each partner contributed individually. The disadvantage could be that these companies are not permitted in all the states; some states restrict the LLC and LLP to specific type of business.
Is a small business owner an entrepreneur? In order to answer this difficult question, one must compare characteristics and understand the difference between small business owners and entrepreneurs. Additionally, one must establish baseline definitions of a small business and an entrepreneur. Clear-cut definitions vary on what categorizes a business as small in the government's eyes, thus, size ...
Any revenue that is not specifically designated to a partner becomes the property of the partnership. A limited partnership has a flow through tax treatment of income and limited tax deductibility of owner benefits. The general partnership is an association between two or more persons, created by the agreement. The assets are owned and share between the partners but they’re also personally liable for business debts or any legal action that the company may face as a partnership. The tax treatment in general partnership is flow through and the tax deductibility is limited. The Limited liability Company (LLC) can be called a hybrid from corporation and limited partnership. It provides limited liability to the persons who make decisions in the business while enabling all inventors to retain all tax advantages of a limited partnership.
They’re limited to the money they have invested in the firm. In this type of business structure they will have the ability the life of a business independent, which increases the liquidity of the owner’s interest, make it easier for the company to raise capital and for investors to sell their interest at a good price. The tax treatment of income is as elected and the tax deductibility of owner benefits is limited. There are two corporations the S corporations and the C corporations; the S corporations are used by public corporations in major exchanges. These corporations are taxed by the subchapter S of the Internal Revenue Service code.
They don’t pay income taxes; the firm’s earnings or losses are divided along and passed through the shareholders. The shareholders report the earnings or losses on their individual tax return. The c Corporation is an entity legally separated from its owners. The profits pass through the owners, has limited liability which provide legal protection. They’re tax in an individual level and double taxation. Also they have the ability to reinvest the profits in the business with a lower corporate tax rate.
Fred and Ginger are general partners in a business. They decide to purchase a building for the partnership. Ginger will put up the money for the building, and Fred will complete the remodeling. While inspecting the building, Fred is informed that the building is packed full of asbestos. He fails to tell Ginger of the presence of the substance. They buy the building and go into business. During the ...
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