By Harrison Furman
Business!! What is Business?
Business is an organization or group of people who own the entity to sell goods or services for money. This definition is simple, but it is really more complex then it sounds.
An entity could be a corporation which has many owners who own shares. It could be a partnership with a couple owners who are partners, or a proprietorship in which you are the sole owner of the company.
All these makes up have advantages and disadvantages for being organized that way. For example, partnerships and sole proprietorships have unlimited liability, meaning they can be sued or held responsible for the company’s debts. Also, they get taxed as income for themselves at their respective tax rate.
A corporation is a legal entry which can sign contracts and do business transactions. These are big companies like Target, Facebook, Visa, Wells Fargo, and MGM. These are legally bind to contracts, which are made by corporate officers (CEO, COO, CIO, CFO, and etc) who are hired by the board of directors. The board of directors are voted in by the shareholders of the company. To be a shareholder you must have bought at least one share of stock in that company which has a right to vote.
The only downside about a corporation is they get taxed twice. Once on the bottom-line and another when the employee receives income. The benefit is limited liability, but it gets taxed twice.
A partnership is an agreement among two or more partners to open and operate a business. Most of the time it might be two people operating the business together, but sometimes there is one operator and the other partner is an investor in the company. A partnership has unlimited liability and will be held accountable for debt.
However, all profits only get taxed once. For example, whatever profit the company has, the partners split up by equity percentage ownership and pay taxes as their normal income.
A sole proprietorship is when only one person owns, operates, and runs the whole business. These businesses are most rewarding because the handwork pays off, but they are of the riskiest kind. They have unlimited liability, no one around them to help them grow the business, but their income is considered the income for the business. This means they only pay taxes once, compared to a corporation. Sole proprietorships is one of easiest ways people become a business because they are easy to create and work in. These businesses include barbershops, accountants, landscaping businesses, and more.
Now that you have heard all three-forms of businesses, you can decide which one is the best. Time to get down to business!