Legal Forms of Business

In: Business and Management

Submitted By ambercj90
Words 1541
Pages 7
Legal Forms of Business
Amber Jackson
MSAO1828E8
June 10, 2013
Norma Sutton

Legal Forms of Business Sole proprietorship - A sole proprietorship is the first step for many businesses. It is not a business entity per se because there is no legal setup involved. Usually these types of businesses have one owner, although in some cases, spouses may own jointly a business. In a sole proprietorship, the owner is responsible for liabilities. There is no distinction between the personal assets of the owner and the business. A sole proprietor does not have to file any special forms at tax time because income is reportable on the individual's personal tax return. (Chron.com, 2013) Scenario: Bobby Mack’s opened a small restaurant to serve popular barbecue food. He is well known for his famous barbecue. Mack named is restaurant “Mack’s BBQ.” Operating this type of business does not mean that it have to do alone. After getting all the items to start his business Bobby hired a few employees to help run the business smoother. Despite the fact his business is not technically a business entity, he can hire however many employees he need. Justification: Bobby Mack chose this form of business because of the simplicity to get it started. It is an unincorporated business owned only by him. The business created itself when he started cooking for events and charities. The advantage of a sole proprietorship is easiness, inexpensive, complete control, and easy tax preparation. Costs are minimal with legal costs limited to obtaining the necessary licenses or permits. Because he is the only owner, he is not obligated to consult with anyone else when needed to make decisions or want to make changes. Also tax rates are also the lowest of the business structures. Partnership -…...

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