Consider each of the following forms of business: sole proprietorship, partnership, limited liability partnership, limited liability company, S corporation, franchise, and corporate form. Develop scenarios in which each of these forms of business would be the preferred form. For each scenario, justify why the corresponding business form is preferred.
1. Sole proprietorship: The scenario is that an individual starts a baking business in his garage. He sells bread and other bakery products from the garage in retail. The appropriate form of business is proprietorship. The justification is that a sole proprietorship is easy to form, little legal costs are required for formation, there are no corporate tax payments, and the owner has full control of the business.
2. Partnership: Two public chartered accountants form a firm that provides auditing services to public companies. The most suitable form of business is partnership. The justification is that the partnership is easy to form, each partner contributes funds for the business, employees have motivation because they may be given the opportunity to become partners, and each partner can specialize in industries where she may practice.
3. Limited liability partnership: Three engineers form a firm to build bridges across rivers. This ...
The response provides you a structured explanation of business forms. It also gives you two relevant references.