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In 200-300 words explain the differences between a ...

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In 200-300 words explain the differences between a proprietorship, a partnership, and a corporation. Why would an entrepreneur want to choose one over the other? If you were starting a new business, which would you choose? Why?
In a proprietorship, the owner is just that: the owner. They are responsible for providing or obtaining the capital for operation of the business. If there is a lawsuit and subsequent judgment against the business the proprietor's assets could be taken to satisfy the judgment. If the proprietor has few assets this is not a concern.

In a partnership (for ease of discussion let us assume two equal partners) both parties are responsible in the same way that the proprietor was in the previous paragraph. The partners share the risks and rewards of the business. Each has equal ability to bind the partnership, incur debts, expose the business to risks, and handle the assets and cash of the partnership. Each partner is exposed to dishonest actions of the other partner. In the event of a judgment against one of the partners, the other partner is at risk as well.

In a corporation, the officers of the corporation act on behalf of the business. The corporation is an entity unto itself. It acts in accordance with it's charter and bylaws. Ownership of the corporation is evidenced by share certificates. The corporation maintains its own books and records. Activities of the corporation are taxed, and salaries and dividends of the corporation are also taxable. In the event of a judgment against a corporation, the shareholders are not at risk beyond the amount they paid for their shares.

Two different kinds of corporations are particularly suitable for small businesses: a "Limited Liability Corporation" and a "Subchapter S" Corporation. In an LLC, the corporation can be structured so that its activities are only taxed once. In an "S" corporation, the activities are reported on the individual income tax returns of the shareholders. If I were to start a new business, it would be based on the best qualities of the LLC and "S" corporations to limit liability, avoid double taxation, and allow for ease of management of the business.
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