Question

Think of a business concept that would be appropriate for each of the following:

1) a sole proprietorship

2) a corporation

3) a limited liability company

In your answer address the pros and cons of the business type (sole proprietorship, Corporation, LLC) and why you the believe the business concept you choose best suits that business type.

Answer 1

ANSWER;

1- Sole proprietorship-

A sole proprietorship, also known as the sole trader, individual entrepreneurship or proprietorship, is a type of enterprise that is owned and run by one person and in which there is no legal distinction between the owner and the business entity.

the business concept which is best for this business type if Local bakery business because in this business concept there is no need for extra financial resources, no need for legal formation like other business type and person can handle a bakery business on their own.

pros of this business type are-

It is easy to form and setup at low cost.There are hardly any restrictions and very few forms to fill out.
As a sole proprietor, you control all of the money made by the business.
You make all business operation calls.
You are management and, thus, can respond more quickly to day-to-day changes and decisions.
You experience less government control and taxation. You don’t have to keep incorporation records and annual corporate records.
You don’t have to do a separate tax return for the business and you don’t have to prepare a balance sheet for the business.

Cons of this business type-

As a sole proprietor, you are responsible for 100 percent of all business debts and obligations. This liability covers all of the proprietor’s assets, including his or her house and car. Additional insurance coverage may be needed to cover personal injury or physical loss that may hamper the continuity of the business.

The death, physical impairment, or mental incapacitation of the owner can result in the termination of the business.

It is typically more difficult for sole proprietors to raise operating cash or arrange long-term financing because they have fewer assets.

All the decision-making power rests with one individual.

A sole proprietorship appears less prof

ation or an LLC.

2) a corporation -

A corporation is a business or organization formed by a group of people, and it has rights and liabilities separate from those of the individuals involved. It may be a nonprofit organization engaged in activities for the public good; a municipal corporation, such as a city or town; or a private corporation (the subject of this article), which has been organized to make a profit.

An incorporated business is separate from its owners. The corporation is formed with Articles of Incorporation under the laws of the state in which it is operating.

The corporation pays its own taxes, and the owners pay taxes on their ownership shares as shareholders on their personal returns. They also report income earned as employees on their personal returns when they additionally serve the business in an employee capacity

The business could be Telecommunication business in which company can do business of internet, electronic devices etc and generate funds from public by offering shares or from investors like banks.

pros of this business type-

Owners have limited personal liability for business debts

Fringe benefits can be deducted as business expense

Owners can split corporate profit among owners and corporation, paying lower overall tax rate .

Cons of this business type-

More expensive to create than partnership or sole proprietorship

Paperwork can seem burdensome to some owners

Separate taxable entity

3) a limited liability company -

A hybrid form of partnership, the limited liability company (LLC) , is gaining in popularity because it allows owners to take advantage of the benefits of both the corporation and partnership forms of business. The advantages of this business format are that profits and losses can be passed through to owners without taxation of the business itself while owners are shielded from personal liability.

The best business concept for LLC would be Opening Brewing company. this is best for this business because of in this business type have limited liabilities and easy flow of funds for operations of business with business partners.

The pros of this business type-

You can form an LLC with as little as one person, but you can also have an unlimited number of members .

Less paperwork and lower filing costs

Flow-through income taxation, keeping things simple .

Members are protected from some (or sometimes all) liability if the company runs into legal issues or debts

Members can receive revenues (and write off forfeitures) that are larger than their individual ownership percentage.

The cons of this business type-

As an LLC member, you cannot pay yourself wages.

Many states have a franchise or capital values tax on LLC’s, ranging from a flat fee to an amount based on the company’s revenue .

Investors may be more likely to put their money into a corporation, making it harder to raise financial capital .

Unless you are running the LLC alone, the ownership of the business is spread across its members (this can also be a pro) .