Business Structure Advice
January 27, 2012Business Structure Advice
Mr. Owner, it is a pleasure doing business with you. I have researched your concerns and found several options that are viable for you and the startup of your company. I hope you will find the following information helpful in making your decision regarding the structure of your business. As always I am available to discuss any of these options and am looking forward to further discussions with you.
The first option is that of sole proprietorship. This option is the simplest business structure available. It is the least regulated form of business and with the lowest income taxes than most of the corporations (Parrino, Kidwell, & Bates, 2012). The disadvantages of a sole proprietorship are that the amount of equity capital that can be invested is limited to the amount of assets owned by the individual and the individual has unlimited liability for all debt and obligations of the proprietorship (Parrino, Kidwell, & Bates, 2012). Also the owner must pay personal income taxes on all the net profits from the business. The taxes for the business are claimed on your personal income tax forms since the business does not claim separate income taxes.
The next option is the structure of partnerships. Partnerships occur when two or more people join together to form a business. You have the options of two kinds of partnerships which are limited and general. The general partnership is basically the same as a sole proprietorship and the tax structure is such that all partners are responsible for the debt and liabilities of the company (Parrino, Kidwell, & Bates, 2012). One way to avoid this is to create a limited partnership. When a partner is a limited partner, they cannot be involved in the daily operations of the business and they relinquish their ability to be actively involved in managing the business. They also have limited liability regarding any debts and…