SOLE PROPRIETORSHIP:
• LIABILITY- The owner assumes all liability of the business, they are the same entity. The owner’s personal assets are at risk in the event the business has debts that it cannot pay.
• INCOME TAXES- Profits and losses are treated as personal income and are claimed on the owners individual income taxes.
• LONGEVITY/CONTINUITY- This business can exist as long as the owner is alive. Since the business and owner are the same entity if the owner dies the business ceases to exist.
• CONVENIENCE/BURDEN- This is the most convenient way to begin a business because the owner can just begin doing business.
• CONTROL- The owner retains complete control over the business.
• LOCATION- Since the owner has full control over business operations he/she can locate or re-locate when and where he/she wants too.
GENERAL PARTNERSHIP:
• LIABILITY- The partners assume all liability for the business, their personal assets are at risk if the business is unable to satisfy its debts.
• INCOME TAXES- The partnership files an information return and each partner will claim their portion of the business’s profit or loss on their individual tax return.
• PROFIT RETENTION- The partnership does not retain a profit, profits and losses are passed through to the partners.
• LONGEVITY/CONTINUITY- The partnership can continue as long as all partners remain involved in the business. If there are multiple partners and 1 withdraws the remaining partners may re-constitute the business.
• CONVENIENCE/BURDEN- It is very convenient to start a partnership, it can be a written or verbal agreement between two or more people.
• CONTROL- All partners have control over the business. Specific responsibilities can be listed in the Articles of Partnership.
• LOCATION- The location of the business is decided by the partners and can be easily moved by agreement of the partners. If the partners re-locate to a different state the business re-locates with them.
LIMITED PARTNERSHIP:
• LIABILITY- The general partner(s) assumes liability as if it was a general partnership. The Limited partner only risks the amount he/she has invested into the partnership.
• INCOME TAXES- Income taxes on a limited partnership are treated the same as those in a general partnership.
• PROFIT RETENTION- The partnership does not retain a profit. Profits and losses are passed on to the partners.
• LONGEVITY/CONTINUITY- The partnership can continue as long as all partners remain involved in the business. If there are multiple partners and 1 withdraws the remaining partners may re-constitute the business.
• CONVENIENCE/BURDEN- A limited partnership must be formed in compliance of state law. A limited partnership cannot be formed verbally.
• CONTROL- The general partner is in control of the everyday management of the business. Typically the limited partner cannot be involved in management of the business.
• LOCATION- The location can be decided by the partners or by the general partner however it is listed in the articles of partnership. If the partners want to re-locate to another state it can be done but the necessary paperwork will need to be completed establishing the limited partnership in that state.
C CORPORATION:
• LIABILITY- A C Corporation is established as a separate legal entity and bears its own liability. Shareholders only risk losing the amount of their investment.
• INCOME TAXES- A C Corporation is taxed on its profits. The shareholders are also taxed on dividends they receive from the Corporation.
• PROFIT RETENTION- A C Corporation retains a profit however a portion of its profits are passed on to its shareholders in the form of dividends.
• LONGEVITY/CONTINUITY- A corporation can continue indefinitely.
• CONVENIENCE/BURDEN- There is a great deal of work to start a corporation, once started there is a great deal of organization and planning involved to keep the corporation going.
• CONTROL- The shareholders meet annually,
