Robert H. Helm
May 11th, 2015
Dear Mr. John Owner,
This email is in response to your email about starting a business and developing your business plan. I have done some research for you about some available option for you. See below the available options to you and the advantages and disadvantages of each option.
Sole Proprietorship This is a business that is only owned by one person. This is one of the simplest type of business to form and is also the least regulated form of organization. This is also one of the most common types of businesses out there today. In many states you can start a sole proprietorship by just getting a business license and opening your doors to the public. With only a little to do in order to form a sole proprietorship it only is a small amount to start up your business. The owner of the company gets to keep 100% of all the profits. The disadvantage to the owner is the unlimited liability for all the business debts. So any debt owed to creditors can be looked past just the business assets and move to the personal assets for payments. There is also no distinction between business and personal income so both are taxed as personal income. The sole proprietorship is limited to the life span of the owner’s life span and can only be limited to the amount of the proprietorship’s personal wealth. This also means that it would also means that the business would be unable to exploit new opportunities because of insufficient capital.
This is a form of business that two or more people would be forming a business together. In a general partnership all owners would share the profits and losses equally. The way that the profits and losses would be described in the partnership agreement. When forming this type of business there will be some partners that will be active in running the business and others that will not be active in the business depending on how the partnership was setup. The advantages and disadvantages are very similar to those of the sole proprietorship. This form of business is really inexpensive to start up. The partnership is binding until one or more of the partners decides to sell out or dies. All the income is taxed as a personal income to all the partners and the amount of equity is based on the partners combined wealth. Because a partner can be held responsible for all partnership debt, having a written agreement is very important in this type of business.
This is one of the most important form of business organizations. Corporations can borrow money and own property just as any other human being. A corporation can be a general partner or even a limited partner or even own