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Business Structure of sole proprietorship

1. What are the advantages and disadvantages of a sole proprietorship?
2. What is the difference between a general partnership and a limited partnership? Which of these two business structures would you choose for the new business you are starting with four partners? Why did you choose this type of partnership?
3. What is a C corporation?
4. What is an S corporation?
5. Which type of corporation (C or S) would you choose for the new business you are starting with twenty associates? Why did you choose this type of corporation for your new business structure?

Solution Preview

1. What are the advantages and disadvantages of a sole proprietorship?
Some of the advantages include:
• You're your own boss
• You're able to keep all of the profits
• Start-up costs tend to be lower
• It's easier to change business legal structure later if needed
• No corporate tax payments

Some of the disadvantages include:
• There's unlimited liability for debts and damages
• The capacity to raise capital may be limited
• You are responsible for making all decisions
• You may have to work longer hours, weekends, and holidays
• No group health insurance
• Responsible for paying self-employment taxes
• There's a lack of ...

Solution Summary

Brief definitions of sole proprietorship, general and limited partnerships, C Corporations, and S Corporations.

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