BUSINESS ORGANIZATION 2 When starting a business there are different reason that specifics that determine which is the best entity to choose. The choice will be based on your financial status, how many people are involved in the business and what type of business you have. We will take a look at the business structures of a sole proprietorship, partnership, LLC, and a corporation. We will also look at the formation, personal liability, taxes, advantages and disadvantages of each business. After reviewing these areas it is then we can best decide the correct entity for the business. Out of all the types of business entities the Sole Proprietorship is the easiest to form. When you are the only owner and you conduct business you can be considered a sole proprietor. Nolo states that “ You only need to begin transacting business and make sure you have any required licenses and permits and you have started your new enterprise ” (Nolo.com, n.d.). To be a sole proprietorship, you do not have to take any formal or legal steps at the federal, state, or local level In order to start but you must just ensure that you have all the required licenses or permits pertaining to your state. A Sole proprietorship differs in liability from all other business types. In other businesses business and personal assets are separate. With a Sole proprietorship there is no separation between business and the owner. According to Nolo “ Your personal assets, such as your home or personal bank account, could be at risk to satisfy unpaid debts, legal judgments, and other legal obligations of your start-up ” (Nolo.com, n.d.). The owner of the businesses can be sued and held personally liable for all debts and injuries.
Multimedia Activity: Business Organization2AbstractVarious business structures can be used to suit a particular business type. Company principles, financing needs, formation, taxation, advantages, and disadvantages must be considered when deciding which business structure would best suit a company or business. A sole proprietorship is the simplest structure to form and the most cost effective. While sole proprietorship business structure may not be suitable for businesses carrying a high possibility ofliability and safety issues, it can be ideal for free-lance professionals such as a photographer. As a free-lance photographer working for individual clients, a sole proprietorship would be the idealbusiness structure. Costs are low and the photographer would take full liability for their own performance and follow through on contractual agreements. Funds to run the business are obtained through the work performed and there is less need to seek out funding or business loans. Since a photographer is dependent on themselves for completion of work performed the control of the business is theirs alone. In the event a photographer hires an assistant the liability would fall on the photographer, possibly leading to an increased risk of taking responsibility for the actions of their assistant. In this case, the photographer may consider changing the business structure to a partnership or LLC. There are various business structures to consider in the event aphotographer decides to expand their business.