Bus 670 Wk 1 Assignment Final Draft.docx
Introduction-
Organizational Entities
Incorporating a business is a decision that must be made to meet the needs of the owner.
Different business structures or entities provide different levels of protection. Some provide
more protection than others, for example, sole proprietorships provide no legal protection
against lawsuits. An owner can be held personally liable in any monetary suits against the
business. Although Corporations provide the most personal liability protection, they also come
with a more complex tax structure and paperwork when initially filing. While entrepreneurs may
struggle with decisions concerning business structures. LLC’s are more successful due to their
ability to be easily attainable within a reasonable time while providing tax benefits to the owner.
In this paper, I will compare and contrast various business entities and prove why LLC’s are a
top choice for a beginning entrepreneur.
Sole Proprietorship
A sole proprietorship is the simplest and oldest business entity to set up because there is no
formal permission needed from the government. An individual who wishes to go into business is
officially considered a sole proprietorship if the business is in their name and a separate bank
account is established (Milto, Bass & Vakil,2015). If the owner wishes to set up the business in
another name they may be required to register a DBA, “doing business as” with local or a
state
governing body. Sole proprietorships offer no legal protection from lawsuits. Owners can be
sued for their business and personal assets (Seaquist, 2012). Tinker’s Home Security Service
has no protection of personal assets.
General Partnerships
Partnerships are formed when two or more individuals come together to start a business. and
what is agreed upon in the partnership agreement (Seaquist, 2012). The advantage of
partnerships is their ability to share in the responsibility of the business and financial
responsibility. To establish a partnership, a partnership agreement can be drawn up specifying
the responsibilities of the owners and the division of assets. Like, sole proprietorships,
Organizational Entities
Incorporating a business is a decision that must be made to meet the needs of the owner.
Different business structures or entities provide different levels of protection. Some provide
more protection than others, for example, sole proprietorships provide no legal protection
against lawsuits. An owner can be held personally liable in any monetary suits against the
business. Although Corporations provide the most personal liability protection, they also come
with a more complex tax structure and paperwork when initially filing. While entrepreneurs may
struggle with decisions concerning business structures. LLC’s are more successful due to their
ability to be easily attainable within a reasonable time while providing tax benefits to the owner.
In this paper, I will compare and contrast various business entities and prove why LLC’s are a
top choice for a beginning entrepreneur.
Sole Proprietorship
A sole proprietorship is the simplest and oldest business entity to set up because there is no
formal permission needed from the government. An individual who wishes to go into business is
officially considered a sole proprietorship if the business is in their name and a separate bank
account is established (Milto, Bass & Vakil,2015). If the owner wishes to set up the business in
another name they may be required to register a DBA, “doing business as” with local or a
state
governing body. Sole proprietorships offer no legal protection from lawsuits. Owners can be
sued for their business and personal assets (Seaquist, 2012). Tinker’s Home Security Service
has no protection of personal assets.
General Partnerships
Partnerships are formed when two or more individuals come together to start a business. and
what is agreed upon in the partnership agreement (Seaquist, 2012). The advantage of
partnerships is their ability to share in the responsibility of the business and financial
responsibility. To establish a partnership, a partnership agreement can be drawn up specifying
the responsibilities of the owners and the division of assets. Like, sole proprietorships,