Small-Business Idea Paper - Assignment Example

Advantages and Disadvantages of Four Different Forms of Business Organizations There are fundamentally four types of business forms currently practiced by entrepreneurs, such as sole proprietorship, partnership, C-Corporation, and S-Corporation. However, with due consideration to their practical implementation, various advantages and disadvantages can be identified which are elaborated in the further discussion. Sole Proprietorship Majority of the businesses observed in the locality are of this kind.

The most significant advantages served by this form of business are the minimum obligation of legal implications. To be elaborated, The profits accrued from the business is entirely receivable to the proprietor Unhindered employment of capital in the business The proprietor possesses exclusive control on the business Tax rebates and exclusion from capital gains are served to the proprietor Apart from these advantages, a sole proprietorship concern also require facing disadvantages as follows, In this case, the proprietor is liable for any loss or repayment of debt incurred from the business Transfer of proprietorship is subjected to a wide number of legal obligations (Pride, Hughes, & Kapoor, 2011) Partnership Partnership concerns are quite different from the forms of sole proprietorship.

It is in this context that this form possesses significant advantages as well as disadvantages in its ultimate implications. These are as follows, Advantages: Partnership firms have no formal requirements for its creation or running the business The partners engaged in the firm are only liable to pay individual taxes and also enjoys distributed liability of any debt and/or loss incurred by the concern Disadvantages: Termination of partnership is subjected to various legal requirement As the concern is not termed as a legal entity, debts and losses incurred by the firms are to be repaid by the partners (Gitman & McDaniel, 2008) C-Corporation Similar to the aforementioned two business forms, this form also possesses significant advantages along with few disadvantages which are as follows, Advantages: Limited liability of the owners as subjected to their investments to the business Gathering a significant amount of capital is uncomplicated in this form Number of owners or shareholders can be unlimited Disadvantages: Operational structure is quite complex Significant influence of legal barriers can be witnessed Rights and power of control in the firm is determined according to the investment considered by the shareholders (Barringer & Ireland, 2009) S-Corporation It has been widely termed that S-Corporations possess missed advantages and disadvantages of partnership firms and other forms of regular businesses.

However, the most apparent advantages and disadvantages of S-Corporation are as follows, Advantages: The owners are required to disburse either corporate tax or individual tax only Constructive rules for employment tax with