Friday, October 18, 2019
Forms of Business Organizations Essay Example | Topics and Well Written Essays - 500 words - 2
Forms of Business Organizations - Essay Example These characteristics of the sole proprietorship distinguish it from a corporation and a limited liability company. A sole proprietor, for example, owns and manages a sole proprietorship, a feature that is different from observations in corporations and limited liability companies. More than one person, for example, owns a corporation or a limited liability company. These owners are called shareholders while the owner of a sole proprietorship is called the sole proprietor. Board of directors who are distinct from the businessesââ¬â¢ owners manages corporations while limited liability companiesââ¬â¢ management is flexible. Another difference between the three forms of businesses is the ownersââ¬â¢ liability over the organizationsââ¬â¢ debts. While a sole proprietor is liable for all of the businessââ¬â¢ liabilities, corporations and limited liability companiesââ¬â¢ owners have limited liabilities that are restricted to their share contributions. Another difference be tween the forms of business organizations is the legal requirements to which they are subjected. While a sole proprietorship only requires the filing of the enterpriseââ¬â¢s name, corporation, and limited liability companies must be registered. The organizationsââ¬â¢ tax liabilities are also treated differently. While a sole proprietorship is taxed as a natural person through the proprietorââ¬â¢s income, a limited liability company is taxed at the business organizationââ¬â¢s level while a corporationââ¬â¢s taxation involves a double taxation in which the organizationââ¬â¢s earnings are taxed and shareholders are taxed on their dividends. The organizations also differ in their structural requirements.Ã
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