Various Business Structures Sole Proprietorship Partnership versus Corporation. CPA Exam REG

In this video, I cover in an overwise of the various business strictures such as sole proprietorship partnership versus corporation.
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Business structures vary significantly, each with its own set of advantages, disadvantages, and legal implications. Here's an overview of three common types of business structures: Sole Proprietorship, Partnership, and Corporation.

Sole Proprietorship:

Definition: A sole proprietorship is the simplest business form under which one can operate a business. It is not a legal entity and simply refers to a person who owns the business and is personally responsible for its debts.
Advantages:
Easy to set up and operate.
Owner has complete control over the business.
Fewer regulations and lower tax rates.
Disadvantages:
Unlimited personal liability for business debts and obligations.
Can be harder to raise capital.
Limited to the life of the owner.
Partnership:

Definition: A partnership is a business structure in which two or more individuals manage and operate a business in accordance with the terms and objectives set out in a Partnership Deed.
Types:
General Partnership: Partners share equal responsibility for management and liabilities.
Limited Partnership: Includes both general and limited partners.
Advantages:
Easy to establish.
Availability of more capital and credit.
Combined skills and knowledge.
Disadvantages:
Partners are jointly and individually liable for the actions of the other partners.
Profit must be shared among partners.
Disputes among partners.
Corporation:

Definition: A corporation is a legal entity that is separate and distinct from its owners. Corporations can be private or public, and they can issue stock to raise capital.
Advantages:
Limited liability for shareholders.
Easier to transfer ownership.
Can raise capital through the sale of stock.
Disadvantages:
More expensive to establish.
Subject to more regulations and government oversight.
Profits are subject to corporate tax rates, and dividends paid to shareholders are taxed again.
In summary, the choice of business structure depends on various factors like the nature of the business, the number of owners, tax considerations, and the level of acceptable risk. It's often beneficial to consult with legal and financial professionals when deciding on the appropriate business structure for your needs.









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