Name: Tosha Brown56

BUSINESS ORGANIZATION CHART

Please complete the chart below. Please type your answers and Submit it to the DropBOX by 11:30 pm on the
due date.

CREATION

CONTROL

SOLE
PROPRIET
OR-SHIP
at will by
owner
no formal
documents
the owner
only needs
to have a
business
license

C
CORPORATI
ON
certificate of
incorporation
must be filed
with the
state they
also need a
local
business
license

entirely by
the sole
proprietor

by the board
of directors
that are

GENERAL
PARTNERS
HIP
created by
the
agreement
of the
parties the
agreement
can be oral
or written
and they
must have a
local
business
license
Jointly by
the
partners,

LIMITED
PARTNERSHIP

S
CORPORATION

created by an
agreement to
carry on a
business for
profit one party
must be a
general partner
and the other a
limited partner
charter must be
issued by the
state

certificate of
incorporation must
be filed with the
state

limited partners
dont have any
control because

is controlled just
like a regular
corporation

LIMITED
LIABILITY
COMPANY
created by an
agreement of the
member-owners of
the company
Articles of
organization are
filed charter must
be issued by the
state

jointly by the
members if so
specified by the

LIABILITY

ABILITY TO
RAISE
CAPITAL

elected by
shareholders
through
officers
appointed by
the board

but one
partner can
obligate

unlimited
liability the
sole
proprietor is
responsible
for
everything

Corporation is
liable for all
debts incurred

each partner
is equally for
the debts if
partner A
cannot pay
then partner
B pays
everything

limited partners
have limited
liability just like
shareholders of
a corporation

is the same as a
regular
corporation

limited liability of
members

responsibilit
y of the sole
proprietor

C
corporation
can raise
capital by
selling
shares of
stock to raise
capital

general
partners can
raise capital
without
losing
control of
the business

limited partners
can raise capital
by selling their
interests to third
parties but they
have to offer the
securities to the
partners first

can sell shares of

stock but can only
have 100
stockholders

has the ability to

raise capital by
bringing in new
partners like a
corporation

and for all

employee
acts when
acting for the
corporation
stockholders
are not liable
above their
investment

the
partnership

it is an
investment the
general partners
control day to
day activities

operating agent

TRANSFERABI
LITY OF
OWNERSHIP

transferabili
ty can
happen but
the
individuals
proprietorsh
ip ends

CONTINUITY

dies with
the sole
proprietor

TAX PAYING
ENTITY?

the sole
proprietor

TAX FORM
SUMMARY OF
ADVANTAGES

1040
the sole
proprietor
gets 100%
of the
profits and
he/she owns
the entire

transferabilit
y can
happen
when the
stocks are
canceled and
given to the
new owner
Perpetual
Not
affected by
death
of a
stockholder

the partner
can sell his
share of the
business

the partner can

sell his share of
the business

transfer without
dissolving the
business by selling
shares

transfer economic
interests and
assignment of all
rights

death of any
general
partner
dissolves
the
partnership

there is a time
limit if it is made
but if there are
no terms it is at
will

PerpetualNot
affected by death
of a stockholder

Continuity
generally
disrupted by death,
Retirement or
resignation.

the
corporation
pay taxes on
its profits
and on what
dividends
they pay to
shareholders
1120
limited
liability,
perpetual
existence,
unlimited
growth
potential,

general
partnership
is not a tax
paying
entity the
partners pay
individually

partners pay
individually not a
tax paying entity

1040
each partner
is entitled to
a portion of
the profits
and losses

1040
ability to attract
investors, allows
general partners
time to focus on
running the
business, limited
partners can be

the s corporation
funnels the profits
or income through
its members and
they claim the
income on their
personal income
taxes
2553
protected assets,
pass through
taxation, tax
favorable
characterization of
income,
straightforward

if there is only one

member then it can
be disregarded but
if there is more
than one then it is
a partnership
unless they file to
be a corporation
8832
are only liable for
what they have
invested they are
not personally
liable

SUMMARY OF
DISADVANTAG
ES

business

certain tax
advantages

the owner
takes all
responsibilit
y and
liability for
all losses
unlimited
liability

money is
taxed when
earned and
when
distributed to
shareholders
and
shareholders
cannot claim
corporate
losses

liable for
partners
actions,
must share
profits,
unlimited
liability,
disagreeme
nts between
partners

replaced without
dissolving the
partnership
cannot sell off
limited
partnership to
raise money like
corporations can
sell shares of
stock

transfer of
ownership
formation of
ongoing expenses,
tax qualification
obligations, stock
ownership
restrictions, closer
IRS scrutiny, less
flexibility in
allocating income

tax flexibility can

backfire, laws vary
by state, and
confusion about
roles