BUSINESS FORMS

Business Forms

Business Forms

Introduction

This study highlights the importance of six business forms and their characteristics. This study also discusses all of the key characteristics, their advantages and disadvantages.

Sole Proprietorship

The concept of sole proprietorship is not new. It is said to be a simplest and oldest form of business firm. A sole proprietorship is an entity owned and operated by one person. (Sullivan and Sheffrin, 2006) The only business can be organized very informally, is not subject to much federal or state regulation, but also relatively easy to manage and control. As a common characteristic of a single enterprise is that the owner is inseparable from the business. Because they are the same person, the owner of a single enterprise has complete control over the business, its activities, and financially and legally responsible for all debts and legal actions against the business. Another aspect of the "same entity" aspect is that the taxes on sole ownership are determined by personal income tax rate of the owner. In other words, the sole proprietor does not pay taxes separately from the owner. A sole proprietorship is a good business organization for individual start businesses, which will remain small, do not have a major impact on liability, and do not justify the cost of registration and ongoing corporate formalities.

- Liability: Proprietor faces unlimited personal liability. - Income taxes: The business does not file or pay taxes.

- Longevity or continuity of the organization: Lacks continuity - Control: Proprietor manages and controls the company. - Profit retention: Proprietor may use all profits and losses for business. - Location: Company

- Convenience or burden: Financial Loss

General Partnership

Iowa Code section 486A.101 (6) explains or describes that a general partnership is an association of two or more persons to carry out as co-owners of the business for profit. In other words, if two or more persons who do nothing more than a verbal agreement to do business as owners, the general partnership is formed. (DeMott, 2001) Partnerships consist of two or more persons set forth in the agreement. Creating an agreement establishes the rights and responsibilities between partners and to regulate their behavior as they conduct business. Sources partnership rights of many people. Much of this law have been codified in Iowa Uniform Partnership Act, Iowa Code chapter 486A. Although no legislative filing necessary for the formation and functioning of the partnership, Chapter 486A assists individuals in creating and defining the relationship between the partners. It can also be a useful reference, when the partnership agreement is silent on a particular topic.

General partnerships can be created by oral agreement, however, usually, and recommended that the partners to define their rights and responsibilities in a written agreement. (Sullivan and Sheffrin, 2006) A partnership is not required to file a statement of partnership with the administration of the Secretary of State, but it is not recommended. Statement of Partnership Authority provides a general partnership with the benefits identified in Iowa Code section ...