Running head: BUSINESS STRUCTURES 1
Business Structures
Student's Name
Institutional Affiliation
, BUSINESS STRUCTURES 2
Business Structures
Establishing a business is quite tedious because numerous factors affect the process. One
of the most common factors that all entrepreneurs face is how the business would be structured.
If an entrepreneur is not keen and lacks effective plans, the process could fail fast. However,
there are no appropriate or inappropriate factors when establishing a business, what matters in
the process is selecting a good business plan. An entrepreneur requires evaluating all options and
then selecting the one that suits their business plan. One could decide if a Limited Liability
Company (LLC), sole proprietorship, or a corporation is the most appropriate following the
factors surrounding the business environment. Comprehending what each entity implies and how
it operates is the first stage to achieving a successful business.
The simplest type of business is a sole proprietorship. A sole proprietorship is started and
managed by a single person. A sole proprietorship does not demand any formal action. One can
run the business under their name or choose a different name. Sole proprietorships are not taxed
separately because they are managed by a single owner (Choose your business structure, 2015).
The income made by the owner is reported on their taxes. The entrepreneur is accountable for all
the income taxes.
A sole proprietorship has numerous advantages and disadvantages. One benefit is that the
owner makes decisions and controls the business alone. They require no approval from outsiders.
Another benefit is that the business entity requires fewer costs. Therefore, a sole proprietorship
could a good choice for a beginner. On the other hand, one drawback of this entity type is
personal liability. Without the security of an LLC structure or corporation, sole proprietorships
could be held personally liable for the obligations and debts of the business (Greenblatt, 2011).
Additionally, the risks extend to the liabilities caused by the conduct of the employees.
Business Structures
Student's Name
Institutional Affiliation
, BUSINESS STRUCTURES 2
Business Structures
Establishing a business is quite tedious because numerous factors affect the process. One
of the most common factors that all entrepreneurs face is how the business would be structured.
If an entrepreneur is not keen and lacks effective plans, the process could fail fast. However,
there are no appropriate or inappropriate factors when establishing a business, what matters in
the process is selecting a good business plan. An entrepreneur requires evaluating all options and
then selecting the one that suits their business plan. One could decide if a Limited Liability
Company (LLC), sole proprietorship, or a corporation is the most appropriate following the
factors surrounding the business environment. Comprehending what each entity implies and how
it operates is the first stage to achieving a successful business.
The simplest type of business is a sole proprietorship. A sole proprietorship is started and
managed by a single person. A sole proprietorship does not demand any formal action. One can
run the business under their name or choose a different name. Sole proprietorships are not taxed
separately because they are managed by a single owner (Choose your business structure, 2015).
The income made by the owner is reported on their taxes. The entrepreneur is accountable for all
the income taxes.
A sole proprietorship has numerous advantages and disadvantages. One benefit is that the
owner makes decisions and controls the business alone. They require no approval from outsiders.
Another benefit is that the business entity requires fewer costs. Therefore, a sole proprietorship
could a good choice for a beginner. On the other hand, one drawback of this entity type is
personal liability. Without the security of an LLC structure or corporation, sole proprietorships
could be held personally liable for the obligations and debts of the business (Greenblatt, 2011).
Additionally, the risks extend to the liabilities caused by the conduct of the employees.
