For the Assessment for each type of business option (sole proprietorship, partne
ID: 435914 • Letter: F
Question
For the Assessment for each type of business option (sole proprietorship, partnership, LLC, Corporation) create an analysis that compares each type of business option. Remember to include ease of formation, liability, tax implications, control of the corporation, ability to raise capital and any other important differences. This assessment is fairly straightforward and intended to be a document you can refer back to in future classes. Simple easy to use comparison of the various forms of business.Explanation / Answer
It is easier to form sole proprietorship and partnership firm when compared to limited liability company or Corporation because lot of paperwork and legal aspect needs to be taken care of while formation of limited liability company or a corporation.
In sole proprietorship and partnership firm the owner have to face full personal liability where is in limited liability company or a corporation the owners or the chairperson would have limited liability.
Ability to raise capital is very less for sole proprietorship and partnership firm when compared to limited liability company. Where is the ability of Corporation to raise capital is very high comparatively.
In sole proprietorship firm, owner has complete control over the company. In partnership firm the control is divided among the owner. In a limited liability company the control is shared among the members. In a corporation, control is shared among the shareholder and the board of director af the Corporation.
In sole proprietorship and partnership firm , the profit gained through business is reported on a personal tax returns. Whereas in corporation and limited liability company various accounting rules are used double taxation method is used while reporting revenue and while paying dividends to the owner.