Why Entrepreneurs First Start Their Business Essay

753 Words Oct 17th, 2016 4 Pages
1. When entrepreneurs first start their business, they have to make a very important decision on what form of ownership they want to use. “The form they choose affects virtually every aspect of establishing and operating their firm, including the initial cost of setting up the business, the way the profits are distributed, the types of taxes (if any) the business must pay, and the types of regulations it must follow.” (Page 90). There are four forms of ownership most company choose from in the U.S. The first form is sole proprietorship, which is when a business is owned and managed by one induvial. All the debit and earnings fall under the owner. The second form is a partnership, which is an agreement between two or more people that act as co-owners of the profits made by the business. Under a general partnership, each co-owner has the opportunity to participate in the company’s management and share in profits. The third form of ownership is, a corporation. A corporation is a “business entity created by filing a form with the appropriate state agency, paying the state’s incorporation fees, and meeting other requirements.” (Page 91). The type of ownership is a legal entity that is separated from its owner, which means that the owner is not responsible for debts and obligations of the company. The fourth form of ownership is called a limited liability company, which is a “hybrid” form of business ownership that is like a corporation in some ways, and like a partnership in…

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