Experts in this subject field are ready to write an original essay following your instructions to the dot!Hire a Writer
When starting a firm, it's important to choose the ideal organizational structure to aid in transitioning and guiding the business's goals. There are various company entities from which to choose. The business module and its objectives will determine the best business structure, nevertheless. I would choose a Limited Liability Company entity when beginning a business because it has several processes and is practical for my firm. A limited liability company (LLC) combines the traits of a corporation and those of a partnership. There are various laws that are used in cases of an LLC that helps a business stand under this structure (Haney n.p). However, depending on the country one is conducting the business from; there are different laws that guide the usage of LLC. It is therefore significant for one to check the legal requirements when it comes to using the limited liability company entity. Moreover, despite there being different laws according to the states, there are existing characteristics about LLC that are common in most of the states.<\/p>
The nature of an LLC as stated in its name is the liability of its members which is in most cases limited to an extent of their business investments. Through this statement, it clearly shows that members of an LLC cannot be sued due to the company\u2019s debts that might above or under their investments. However, there is a rule that might appear different in cases where a member may be deemed liable by the company. This happens in most cases if a member had guaranteed a loan to a personal capacity.<\/p>
There exist taxation policies when a business uses the LLC entity. However, in most cases, the LLC itself is not taxed in most countries. It is the company\u2019s members who pay those taxes on the profits they get individually. To reduce the tax bill, members may be required to plough back their profits into the business. However, members in this entity have the authority to choose their business entity classification when it comes to taxation. On the other hand, an LLC entity has unlimited number of members where the members have the opportunity to involve themselves in any management requirement of the business. The LLC has reduced administration and annual general meetings are not a necessity (Lazonick n.p). However, the whole business is required to be registered in the state of corporation offices to give it a legal consent for its operations.<\/p>
There are various steps used when forming a limited liability company. First, one has to choose a suitable name for the Limited Liability Company. The name of the business must not correspond with any other business name registered. Secondly, one needs to file articles of organization. Then, an operating agreement for the LLC needs to be created. In some cases, one may be required to publish a notice in some states. The other requirement one needs to do is to obtain permits and licenses. Lastly, the owners of the LLC are required to retain their limited liability.<\/p>
A partnership entity simply stands for an agreement between two people who join hands together to form a business for a profit (Lazonick n.p). Formation of a partnership entity requires one to have a business name and register it with the state of incorporation to get legal consent for the business operation. This type of entities requires only two people to come together in a business venture for profit. The main advantage with partnerships is that each one gets a share of the profits and they can conduct a variety of businesses. The disadvantage is that each partner has a limited partnership for the business debts. In terms of taxation, the entity is not taxed in itself, but partners get taxed through their income flow at their personal levels.<\/p>
An individual runs this type of business entity for their own profits. It is regarded to as the simplest form of business organization (Lazonick n.p). The liabilities for the entity are entitled to the owner of the business and terminated upon their demise. The main advantage with a sole proprietorship is that it is easy to form and operate. To form a sole proprietorship, one is required to find a suitable business name for the venture and register it with the state authorities. In terms of taxation, the entity is not taxed but the owners are taxed at personal level.<\/p>
A corporation business structure operates under state laws and its activities are restricted by its charter (Lazonick n.p). Running the entity requires one to file articles of incorporation so as to establish a corporation. Its liability lies on its stockholders where some of the employees who are also stockholders may get tax-free privileges. In terms of taxation, a corporation is double taxed. Taxation occurs on both its profits and stockholders\u2019 dividends. To form a corporation, one needs to find a suitable name for the entity and register it with the required state authorities under state laws. The main advantage of having a corporation is that it helps one separate the company\u2019s assets and their personal assets. Double taxation is the main setback that affects the corporation business entity.<\/p>
Haney, Lewis Henry. Business Organization and Combination. BiblioBazaar, LLC, 2009.
Lazonick, William. Business organization and the myth of the market economy. Cambridge University Press, 1993.
This sample could have been used by your fellow student... Get your own unique essay on any topic and submit it by the deadline.
Hire one of our experts to create a completely original paper even in 3 hours!