In your analysis,
Explain, if you were to start your own business, which business entity structure you would choose.
Justify why your chosen structure is the best organizational form.
Explain the following business structures: sole proprietorship, partnership, LLC, and a corporation.
Analyze the following for each business structure:
steps to form
personal liability for owners
taxation
advantages and disadvantages
The Business Organization paper
must be three to five double-spaced pages in length (not including title and references pages) and formatted according to APA Style as outlined in the Writing Center’s APA Formatting for Microsoft Word resource.
must include a separate title page with the following:
Title of paper in bold font
Space should appear between the title and the rest of the information on the title page.
Student’s name
Name of institution (The University of Arizona Global Campus)
Course name and number
Instructor’s name
Due date
must utilize level headings to organize the paper. See the APA Style Elements resource for assistance.
must utilize academic voice. See the Academic Voice resource for additional guidance.
must include an introduction and conclusion paragraph. Your introduction paragraph needs to end with a clear thesis statement that indicates the purpose of your paper.
For assistance on writing Introductions & Conclusions and Writing a Thesis Statement, refer to the Writing Center resources.
must use at least two credible and/or scholarly sources in addition to the course text.
The Scholarly, Peer-Reviewed, and Other Credible Sources table offers additional guidance on appropriate source types. If you have questions about whether a specific source is appropriate for this assignment, please contact your instructor. Your instructor has the final say about the appropriateness of a specific source.
To assist you in completing the research required for this assignment, view Quick and Easy Library Research tutorial, which introduces the University of Arizona Global Campus Library and the research process, and provides some library search tips.
BUSINESS ENTITIES:
Type of business
Advantages
Disadvantages
Sole proprietorship
Only one person in charge.
Tax disadvantage in that all income is taxed at personal rate.
General partnership
Divide the work; share liability; pass-through taxation.
Liability for acts of other partners; easy to dissolve; self-employment tax; difficult to transfer interest.
Limited partnership
Limited liability for losses; shared responsibility for work; general partner maintains the power.
General partner has all the liability; limited partners only liable up to the amount of their investment.
Limited liability partnership (LLP)
Insulates each partner’s assets from liability of the other partners; can have many partners; can add partners easily; less paperwork than LLCs and corporations.
Depending on the state, limited to certain types of professionals such as attorneys and doctors; insurance is very expensive.
C corporation
Shareholders limited to investment; shields from liability.
Costly and difficult to form; double taxation: corporation taxed on income; shareholders pay tax.
S corporation
Shareholders limited to investment.
Pass-through taxation like a partnership; each shareholder is subject to their own tax rate.
Limited liability company (LLC)
No restrictions on who owners can be (e.g., U.S. v. non-U.S. citizens); allows for the deduction of operating losses against income; has flow-through taxation.
Governed by state law; may have more costs to form and maintain; states charge formation fees; also ongoing fees, annual reports, and franchise tax fees.
