Fred and Sally Johnson,
I have reviewed your questions and concerns regarding the formation of the business “Fred’s Miracle Cough Syrup”. Below you will find my comments and recommendations for each item of concern.
Item I: Type of business entity
A. Sole Proprietorship: A sole proprietorship in a business entity in which the sole owner is in control of the business and the management of it. The advantages of a sole proprietorship include the business owner being able to easily start the business, as it doesn’t require many legal formalities, the owner has complete control of the management of the business and can determine how to run the business in a way that works best for them, and the owner gets to keep all of the profits of the business. The profits are taxed as personal income for the sole proprietor. The disadvantages of a sole proprietorship are that the owner is personally liable for any losses or obligation of the business, and funding is limited to start the business as it only relies on personal funding and personal loans that the sole proprietor can acquire.
B. Partnership: There are different types of partnerships, however a partnership is defined as a voluntary association between two or more people who co-own a business for profit. There are several types of partnerships including General Partnership, Limited Partnership (LP), Limited Liability Partnership (LLP), Joint Venture, Franchise and Business Trust. The advantages are that the formation is easy, a written agreement is not required, and partners are separate entities so they are taxed individually and the business losses are tax deductible. The disadvantages are that the partners are personally liable for the losses of the business, including the losses of the other partner in most cases. C. Corporation: A corporation is a legal entity formed by selling shares of stock to investors whom become shareholders and are able to elect a board of directors. The advantages of a corporation is that it is a separate legal entity, the profits are taxed as income to the shareholders, there is limited liability, and it is easier to raise the capital of the business. The disadvantages are that they are double taxed and formalities are required to establish and maintain its corporate form. D. Limited Liability Company: An unincorporated form of a business organization that is taxed like a partnership with members paying personal taxes, and has the limited liability of a corporation. The advantages of a limited liability company are that it allows management options that other business entities do not have, they are not required to conduct periodic meeting and the …show more content…
The other options include, but are not limited to: cooperatives, joint stock companies, business trusts, syndicate joint ventures, and franchises. If these business organizations are something you would like to discuss at a later date please let me know. By taking some time to review the above options that I have explained, it is clear that there are similarities and differences for the types of business entities and advantages and disadvantages to each that should be considered.
Item II: Product Liability Product Liability is the liability of any or all parties along the process of manufacturing of any product that caused damage. This includes the retailer, wholesaler, assembling manufacture, and manufacture of component parts. Products that have defects and cause harm to a consumer of the
I have reviewed your questions and concerns regarding the formation of the business “Fred’s Miracle Cough Syrup”. Below you will find my comments and recommendations for each item of concern.
Item I: Type of business entity
A. Sole Proprietorship: A sole proprietorship in a business entity in which the sole owner is in control of the business and the management of it. The advantages of a sole proprietorship include the business owner being able to easily start the business, as it doesn’t require many legal formalities, the owner has complete control of the management of the business and can determine how to run the business in a way that works best for them, and the owner gets to keep all of the profits of the business. The profits are taxed as personal income for the sole proprietor. The disadvantages of a sole proprietorship are that the owner is personally liable for any losses or obligation of the business, and funding is limited to start the business as it only relies on personal funding and personal loans that the sole proprietor can acquire.
B. Partnership: There are different types of partnerships, however a partnership is defined as a voluntary association between two or more people who co-own a business for profit. There are several types of partnerships including General Partnership, Limited Partnership (LP), Limited Liability Partnership (LLP), Joint Venture, Franchise and Business Trust. The advantages are that the formation is easy, a written agreement is not required, and partners are separate entities so they are taxed individually and the business losses are tax deductible. The disadvantages are that the partners are personally liable for the losses of the business, including the losses of the other partner in most cases. C. Corporation: A corporation is a legal entity formed by selling shares of stock to investors whom become shareholders and are able to elect a board of directors. The advantages of a corporation is that it is a separate legal entity, the profits are taxed as income to the shareholders, there is limited liability, and it is easier to raise the capital of the business. The disadvantages are that they are double taxed and formalities are required to establish and maintain its corporate form. D. Limited Liability Company: An unincorporated form of a business organization that is taxed like a partnership with members paying personal taxes, and has the limited liability of a corporation. The advantages of a limited liability company are that it allows management options that other business entities do not have, they are not required to conduct periodic meeting and the …show more content…
The other options include, but are not limited to: cooperatives, joint stock companies, business trusts, syndicate joint ventures, and franchises. If these business organizations are something you would like to discuss at a later date please let me know. By taking some time to review the above options that I have explained, it is clear that there are similarities and differences for the types of business entities and advantages and disadvantages to each that should be considered.
Item II: Product Liability Product Liability is the liability of any or all parties along the process of manufacturing of any product that caused damage. This includes the retailer, wholesaler, assembling manufacture, and manufacture of component parts. Products that have defects and cause harm to a consumer of the