Explain the legal and financial characteristics of each of the five main form of business entities described. Discuss the implications of applicable laws and regulations, for each type of business entity, on how the business is organized, governed, and operated. For each type of business entity, explain the following characteristics
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Proprietorship: This is an unincorporated business formed and operated by a single person.
Formation: Local registration is required for formation. The commencement of business leads to its formation.
Termination: The cessation of business and closing of local registration is required for terminating the business.
Ownership type: it is owned and operated by a single person. The individual owns it.
Owner liability: The owner is liable for all the debts and legal suits of the business.
Taxation: All business income or losses are reported on the personal income tax return. The business is not taxed separately from its proprietor.
Advantages: Easy to form, small business can commence immediately, and owner has full control of operations. There is no outside interference in the operations.
Disadvantages: The proprietor is fully liable for debts of the business. He must answer all legal suits against the business. it is difficult to get large scale capital with this form of business.
Partnership: More than one owner.
Formation: A business name is chosen, the state law requirements for registering a partnership should be fulfilled, and it is desirable to have a partnership agreement.
Termination: The termination occurs when a partner leaves, resigns, or dies. ...
The answer to this problem explains five forms of business. The references related to the answer are also included.