Forms of Business Ownership

Forms of Business ownership: I'm Sally and I really want to open my own bakery the problem is I'm unsure if I should open a sole proprietorship a partnership or a corporation to find out a little more about the advantages and disadvantages of each form of business ownership I'm going to interview some local business owners come along with a Dave you've owned your fitness club for about ten years now I'm wondering if you

can tell me a little bit about owning a sole proprietorship and some of the advantages and disadvantages sure Sally no problem the sole proprietorship is usually owned and managed by one person it can be easier to start and end than other forms of business and to start out you need to lease or buy the equipment in the rental space and obtain any permits or licenses you may need for your particular type of business since you're

the owner you're your own boss which to me is a great benefit and also I got pride in ownership because I started and created this fitness club have you loaded this today and leaving a legacy as I feel like this is something I can pass along to my children I also retain the company profits and because of this whole proprietorship there's no special taxes which means that all of the profits are taxed

as personal income and I pay the normal tax on that money as well as self-employment tax as far as disadvantages I would say that unlimited liability is one of the greatest factors you and your business are considered one and if the business suffers the money comes out of your pocket so you're required to pay even if it requires you to sell your home or car to pay that balance there's also a limited

financial resources some of the funds I have for the business they're only what I can gather and also there can be some management difficulties because I need to be the jack of all trades and so I need to be very well-rounded with the different departments such as accounting marketing and so on it's also not your normal 95 job I often will get here at 6:00 in the morning and be working until 9:30 or

10:00 at night I also need to purchase my own 401k and health insurance and then lastly there can be limited growth and lifespan with a sole proprietorship that's great thanks for sharing with me do it Daniel you've owned your accounting firm for a while now and I'm wondering if you can share with me a little bit about your experience and starting a partner show business well I would say one of the advantages is

that we can pool our financial resources and we can oftentimes get a larger loan or be able to raise more money and we have complementary skills and knowledge for example bill is great with marketing whereas I'm more focused on the accounting so together we make a good team in that way and it's been found that partnerships have a greater chance of survival and lastly similar to sole proprietorships profits for Jax there's also unlimited liability

which is quite a disadvantaged so if one of us makes a mistake or one of us causes the business to struggle we both pay for it we also divide all the profits and there can sometimes be disagreements among partners so far we haven't had anything too big but we have at some distance that we've ended up compromising on and lastly we have a faceless either but it can be very difficult to determine

a to the business because it often requires one partner buying all the other and it can cause some hard feelings great thanks Damian bill this is very helpful hi Ted you've owned this health insurance company for about twenty years now and I know you started as a partnership but now you've turned it into a corporation I'm wondering if you could tell me some of the advantages and disadvantages sure Sally one of the advantages is

that but the corporation you have limited liability as an owner I'm only responsible for the losses up to the amount I invested fundraising becomes much easier as you're able to sell shares of stock to investors we can raise much greater amount of money we also have a higher likelihood of obtaining loans due to our size corporation also is considered to have perpetual life as even if the owner passes away the business still continues on and

changing ownership can be pretty easy as all you need to do is to sell the SAC to someone else so they become the majority shareholder since we're so large we found that we're able to attract talent which can greatly affect the outcomes of our business and our success there also is a distinct separation between owners and managers the owners and stockholders elect a board of director who in turn hires officers of the corporation

to oversee different policies and issues that the business faces great how about disadvantages well the initial cost is quite high when we decided we wanted to make a quick required expense of paperwork accountants lawyers we also need to be very transparent with how the business is doing and relay that information to the shareholders were taxed twice and what this means is that the corporation pays tax and income before it can distribute any of its dividends

and then his shareholders also pay tax on the dividends do receive you'll also must file two tax returns an individual one and also the corporate tax return anyway notice I said size was an advantage but it can also be a disadvantage for example a lot of companies once they get to a certain size can be inspected and it can be difficult to implement change so it's it's something we always need to be aware

of it can also be difficult to terminate the business once it gets quite large corporations can also face contact between the shareholders and the board of directors as they may disagree on business practice great thank you for your time okay so today I learned so much more about sole proprietorships partnerships in corporations and the advantages and disadvantages of each and the good news is I can get settled on what type of business ownership I

would like to move forward with when I open my bakery I've decided on a sole proprietorship I plan to start it out small and then continue its growth and who knows maybe one day it'll become a corporation or even a franchise created using powtoon

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types of business organizations

Forms of Business ownership: I'm Sally and I really want to open my own bakery the problem is I'm unsure if I should open a sole proprietorship a partnership or a corporation to find out a little more about the advantages and disadvantages of each form of business ownership I'm going to interview some local business owners come along with a Dave you've owned your...