Week 6 Discussion Sample Paper
Week 6 Discussion Sample Paper
- Identify the main types of business entities and discuss the advantages and disadvantages of each.
There are five types of business entities. The first kind of business entity is sole proprietorship, a business entity that is owned and run by an individual with no legal distinction between the business owner and entity. Its advantages include easy forming and dissolving, and minimum legal restrictions. Its main disadvantage is unlimited personal liability. The second type is partnership in which two or more people have an agreement that forms a legal relationship between them to be co-owners in the business. Its advantages include combining and complementing skills and abilities, and flexible and easy to establish. The disadvantages include difficulty to dissolve business, unlimited liability, and potential disagreements in making decisions. The third type is C Corporation that is taxed separately from its owners. Its advantages include limited liability, ability to raise capital from issuing stock, and easy to transfer ownership. Its disadvantages include double taxation on profits, restrictions on types of business activities, subject to federal and state controls, liquidation triggers significant double taxation, and incurs accumulated earnings tax. The fourth type is S Corporation that is not taxed separately from its owners. Its advantages include limited liability, avoids double taxation, and ability to raise capital through issuing stock. Its disadvantages include undistributed earnings attract taxes, and limit on number of shareholders. The final type is limited liability company that is defined as a private partnership where the owners are responsible for debts only to the extent of the invested capital amount. Its advantages include avoiding double taxation, complementary skills from owners, and disproportionate allocation and distribution of include. Its disadvantages include possible disagreements in decision-making (Burrow & Kleindl, 2013). Week 6 Discussion Sample Paper
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- Recommend a specific business entity for Arcadia Sports and include your reasoning.
A limited liability company that is taxed as a partnership is the best business entity for Arcadia Sports. That is because the owners have limited liability and are only responsible for any debts incurred to the extent of the invested capital amount. This implies that any debts beyond their capital amount will not be considered their responsibility (Burrow & Kleindl, 2013).
- Based on the characteristics of each type of business entity, determine the type under which Jeb and Josh would be personally liable to Jane for damages.
A partnership would make Jeb and Job personally liable to Jane for damages. That is because this type of business entity has the owners having unlimited liability (Burrow & Kleindl, 2013).
reference
Burrow, J. L. & Kleindl, B. (2013). Business management (13th ed.). Mason, OH: South-Western.
Week 6 Discussion Sample Paper
