Explain And Differentiate In Detail The Legal Forms Of Business Ownership
Sole proprietorship partnership limited liability company LLC corporation or nonprofit. A Partnership is a relatively simple way for two or more legal persons to set up and run a business together with a view to profit.
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A business that is a legal entity created by the state whose assets and liabilities are separate from its owners.
Explain and differentiate in detail the legal forms of business ownership. Limited Liability companies act as independent entities from the owners and aid in dividing personal and business assets and debts. These firms are owned by one person usually the individual who has day-to-day responsibility for running the business. The vast majority of small businesses start out as sole proprietorships.
It is a mix between a corporation and a partnership. Since there is no legal distinction between the business and the owner the owner is in direct control of the proprietorships activities and is accountable for all its debts. LLCs are taxed in the same manner as a sole proprietorship if there is one owner and taxed as a partnership if there are multiple members.
A partnership can arise without any formal agreement when people carry on a business in common but typically there is agreement to trade as a partnership. When you start your business you will have to decide on which type of business entity you will be. Partners will usually draw up a legally binding partnership.
While there are also public corporations -- who stock and ownership are traded on a public stock exchange -- most small businesses are or at least start as private corporations. This sole proprietor is responsible for all aspects of the business and reaps all profits of the business. Sole proprietors own all the assets of the business and the profits generated by it.
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