Types Of Business Org.

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Slide 2:

“One of the first decisions that a person(s) needs to make is how the company should be structured. The four basic legal forms of ownership for small businesses are a Sole Proprietorship, Partnership, Corporation, and Limited Liability Company.”

Sole Proprietorship :

Sole Proprietorship “Most small business start out as sole proprietorships. These firms are owned by one person who is normally active in running and managing the business.”

Partnership :

Partnership “A partnership is two or more people who share the ownership of a single business. In order to avoid misunderstandings about how profits/losses are shared , who's responsible for what, and other management, ownership, and operating decisions the partners normally have a formal legal partnership agreement. ”

Corporation :

Corporation “A corporation is an organization that is made up of many owners who normally are not active in the decision making and operations of the business. These owners are called shareholders or stockholders Their ownership interest is represented by certificates of ownership (stock) issued by the corporation.”

Limited Liability Partnership (LLP) :

Limited Liability Partnership ( LLP) “The LLP is a relatively new type of business structure that combines the benefits of a partnership and corporation.”

Slide 7:

Factors To Consider When choosing a Type of organization

Slide 8:

Tax Consequences - Central and State What taxes do you have to pay to the Central and state taxing authorities ? Is the business organization a pass-through (income only taxed once) or is the income taxed twice ? Ease and cost of formation and recurring registration fees What documents do you need to file and what are the initial and recurring costs for the type of organization ? Degree of control Do you want to call all the "shots" ? As a sole owner you get to. Cont…….


Cont……. Liability (personal) Do your personal assets need protection from legal liability ? Are you willing to be liable for others (partners) ? Ability to get money (capital) Do you need other investors to get your business "off the ground" ? Type of Business If your type of profession requires a special license, is it limited to what type of organization that can be selected ?


“All the different types of organizations listed above have some unique methods and rules for accounting for their transactions associated with their equity (ownership) accounts. This tutorial in order to keep it simple and since many small businesses start out organized as sole proprietorships will focus on bookkeeping for a sole proprietorship” Cont…….

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