Question

Kevin wants to start his own business, but he doesn’t know anything about the different options he will have for organizing his business. He asks you for your advice. How would you describe the nature and types of business organizations for Kevin so he can make the best choice for how to structure his new business?

Answer 1

Answer:

In business there is something called sole proprietorship. Proprietor is another word for owner, so a sole proprietorship has a single owner. The owner is fully liable, or legally responsible, for all the business’s actions and any debt it incurs.The other kind of business organization is called a partnership. A partnership allows for  two or more people to share ownership of a business. There are different kinds of partnerships. In a limited partnership (LP) only one of the partners has unlimited liability while the other partner or partners have limited liability for the company and limited control over business decisions as well. In a limited liability partnership (LLP), no partner is fully liable for the business’s debts, and partners are not responsible for the actions of one another. A limited Liability Company (LLC) protects the business’s owner or owners from personal liability in most situations. In the case of bankruptcy or a lawsuit, the owner doesn’t face personal risk. Their personal assets (property of value) are protected.Corporation: When a business is incorporated (structured as a corporation), it becomes a legal entity separate from the owner or owners. While it can be time-consuming and expensive to set up a corporation, this structure provides a business owner with the best protection against personal liability. Another advantage is that corporations can sell stocks, or shares, to raise funds.