An Explanation of Different Business Types Essay - 1225 Words

A sole proprietorship is a business that is solely ran by one person. â€Å"According to data from 2003, there were more than 17.5 million proprietorships operating in the U.S. and those generated $969 billion in revenues† (Hodgetts Kuratko, 2008). Establishing a sole proprietorship is easy if an owner uses one’s own name or can use a trade name by filing with the city of business. Financial advantages to a sole proprietorship include all the profits belong to the owner of the business minus taxes, social security and Medicare paid out. Some proprietors have higher credit ratings because both the business and personal assets stand behind them. Lack of restrictions and freedom to run your own business and for some may need to get†¦show more content†¦Partnership agreements are drawn up in case if a partner dies to include profits and losses, duties of partnerships, manners of controversies and how they will be settled to divisions of assets. Types of partnership include a general partnership which has very active partners and assume responsibility for the firm. Limited partners include invest in a partnership but take limited risks of their assets as if the business fails they lose their investment but not their assets. â€Å"A silent partner is one who is known as a partner by the general public but who does not play an active role in the operations of the business† (Hodgetts Kuratko, 2008). Someone who plays an active role in the business but may not be known by the public is a secret partner. A person who does not play a role in the business or known by the public is known as a dormant partner. A nominal partner is giving their name to be used to represent a partnership without investing or playing a role in the firm. â€Å"A limited liability partnership (LLP) is a relatively new form of partnership that allows professionals to enjoy the tax benefit of a partnership while avoiding personal liability fo r the malpractice of their partners† (Hodgetts Kuratko, 2008). Advantages of partnership include increased sources of credit and capital. Loans are easier to get since the number of people involved in a partnership are more likely to pay back any financial burden that mayShow MoreRelatedAccounting And Accrual Basis Of Accounting Essay983 Words   |  4 Pages1) Business owners are given a choice between using the cash basis of accounting and the accrual basis of accounting. a) Which of the two methods do you believe a business would choose? Depends on what kind of benefit the business owners are looking for. b) Why? 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