FORMS OF BUSINESSES Essay Example | Topics and Well Written Essays - 1500 words

FORMS OF BUSINESSES - Essay Example Under the sole proprietorship form of business, the business ends either when the person decides to go out of business, or if the person dies or somehow cannot operate the business. There is nothing formal that needs to be formally done to end the business. In the case of a general partnership, the same principles as with sole proprietorships apply in regards liability for injuries or accidents. The only real difference would be that the partners would share liability instead of all the liability resting with one person. In a bankruptcy case, the general partners would be personally liable for unpaid bills of the business. The legal rules apply differently from state to state, but being both jointly and separately liable is most common. This gives a third party the option to bring suit for unpaid bills either against one partner or against the partnership as a whole (Clarkson, et.al, 2006). The partners would find that it is easier to expand the company than for a sole proprietor. If there were two partners, they could combine their funds and resources for expansion. Banks would more quickly approve loans if more than one person was involved (Clarkson, et.al, 2006). The partners could invite more partners to join if more funds are needed. They could have a written agreement that the new partners provide funds or capital as part of the agreement to join the group (Clarkson, et.al, 2006). With a general partnership, the partnership itself is not taxed. Any income or losses flow through over to each individual’s income tax statements. The owners are taxed on their proportionate share of the business (Willis, et.al, 2009). Under general partnerships, the articles of the partnership determine how long the business operates. Those articles can state exactly the length of time that the partnership will continue. If nothing is stated in the articles, then any partner can end it by choice. If there is an agreement in