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Business Structure Advice Essay

813 words - 4 pages

Business Structure Advice
Jennifer Yacovazzi
FIN/571
May, 12, 2014
William Stokes

Business Structure Advice
In beginning a business people will start one for a variety of intensions. Some people think they have a merchandise or service that will transform a business or make them wealthy. Others might live in an area where there is no job openings, and starting a business is the only way to earn a living. Other people simply want to be their own boss. Whether any of these reasons can help a person to decide to start a business. We will discuss the organizational forms of business, advantages and disadvantages of each, and possible tax consequences for each business structure.
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“Another disadvantage is the amount of equity capital that can be invested in the business is limited to the owner’s personal wealth, which may restrict the possibilities of growth” (Parrion, Kidwell, & Bates, 2012).
In a partnership, it will depend on what partnership is chosen whether it is a general or limited partnership to explain the advantages and disadvantages. “The key disadvantage of a general partnership is that all partners have unlimited liability for the partnership’s debts and actions, regardless of what proportion of the business they own or how the obligations were incurred” (Parrion, Kidwell, & Bates, 2012). “In a limited partnership, the partner is liable for business obligations only up to the amount of capital he or she contributed to the partnership” (Parrion, Kidwell, & Bates, 2012).
An advantage to a corporation is that your personal assets are protected from the business debt or liability. A disadvantage is a general corporation are more difficult to start. A Subchapter S Corporation advantages are tax savings, business expense tax credits, and allowing a business to have an independent life separate from its shareholders. The disadvantages are stricter operational process and shareholder compensation requirements. An LLC has the added flexibility for managing the business and with fewer S corporation ownership restrictions. A limited liability corporation is fairly easy to obtain and there is a little bit of protection.
The choice of the...

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