Types of legal ownership for businesses in the united states

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Reference no: EM13833999

There are four main types of legal ownership for businesses in the United States. These are sole proprietorship, general partnership, limited liability company (LLC), and corporation. These differ from one another on a few major characteristics such as number of owners, operational requirements, and federal taxation.

Complete the following table on the types of business ownership structures: (included as an attachment)

Types of Legal Ownership

Ownership Structures

Sole Proprietor

General Partnership

Limited Liability Company (LLC)

Corporation

Number of Owners



One or more

Multiple

Formation Difficulty


Low

Medium


Liability

Sole proprietor has unlimited liability.



Officers/shareholders are not typically responsible for the debts of the corporation.

Operational Requirements


There are relatively few legal requirements.


Formal board of directors, annual meetings, and annual reporting required.

Management

Sole proprietor has full control of management and operations.


Members have an operating agreement that outlines management.


Federal Taxation


It is not a taxable entity. Each partner pays tax on his/her share of income and can deduct losses against other sources of income.


It is taxed at the entity level. If dividends are distributed to shareholders, they are also taxed at the individual level.

Explain in detail the characteristics of the types of business ownership structures using real-world examples to illustrate. Be sure to provide at least one example for each type. Write a 1-2-page paper in Word format. Apply APA standards to citation of sources. Submit both your completed table and your paper for grading.

Reference no: EM13833999

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