Business Organizations

Business Organizations

Class notes:

  1. Sole Proprietorship - No protection of personal assets, and cash flows through and is taxed at personal rate.
  2. Partnership - No protection of personal assets, and has joint liability. Cash flows through and is taxed at personal rate.
  3. Corporation, C-Corp - Offers many protections, and pays corporate tax rate then pays personal tax rate.
  4. Corporation, S-Corp - Offers many protections, cash flows through but with dividend.
  5. LLC, LLP - Has seperate business assets, which gives personal protection. Cash flows through and is taxed at personal rate.

Book Notes
3rd edition, Chapter 1

  1. Sole Proprietorship - Benefits; easy to form and inexpensive to setup. Disadvantage; No personal liability protection. Cannot issue stocks and bonds, making it difficult to raise capitol.
  2. Partnership - Same as above. Plus a partnership must be dissolved and reorganized if one of the partners quits.
  3. Corporation - Can raise capitol from large number of investors by issuing stocks and bonds. Permits easy transfer of ownership interest by trading of shares. Allows limited liability, personal liability is limited by the amount invested in stocks. It is taxed differently than proprietorships, tax laws favor corporations. Disadvantages is that a corporation is more expensive to setup and has more requirements and regulations.
  4. LLC,LLP - the book makes no mention of the this.
Unless otherwise stated, the content of this page is licensed under Creative Commons Attribution-ShareAlike 3.0 License