June 3rd, 2011
University of Phoenix
Legal Forms of Business Paper
Selecting the best form of operating a business depends on the type of business the owner wants to run. The owners have to pick the structure that best meets their needs. “The selection depends on many factors, including the ease and cost of formation, the capital requirements of the business, the flexibility of management decisions, government restrictions, personal liability, tax considerations, and the like” (Henry Cheeseman, 210, p. 529)
Moreover, choosing the right form to run a business will also determine how the business is organized, how the cash flow is, and how the business is taxed. “The most common …show more content…
The business form of corporation was not selected because of the process of forming a corporation takes time and money, compared with the rest business forms. Corporations are often audited by the government and have to deal with more paperwork to comply with the regulations of the states in which the business will run. Also, in corporations dividends paid to shareholders are not deductible from the business income; it may turn out taxing this income twice. Corporation is a business form more expensive to create than sole proprietorship or partnership. There is more paperwork in corporation than other forms of business. Corporation carries several tax disadvantages, and pays taxes on its own income.
Whereas limited liability partnership was not chosen because of the disadvantages it offers for this kind of business that Vic, Susan, and Monica want to run. Limited liability partnership is more expensive to create and to maintain than sole proprietorship and partnership. In this form of business if one partner leaves, the business is dissolved.
Limited partnership is a good method for Vic, Susan, and Monica to use the limited partnership as a form of business because of the advantages it presents for their good. Through this business form, they can share the profits with a minimum of effort. This form is also easy to attract investors.