Forms of Business Organizations Essay Example | Topics and Well Written Essays - 500 words - 2

Forms of Business Organizations - Essay Example These characteristics of the sole proprietorship distinguish it from a corporation and a limited liability company. A sole proprietor, for example, owns and manages a sole proprietorship, a feature that is different from observations in corporations and limited liability companies. More than one person, for example, owns a corporation or a limited liability company. These owners are called shareholders while the owner of a sole proprietorship is called the sole proprietor. Board of directors who are distinct from the businesses’ owners manages corporations while limited liability companies’ management is flexible. Another difference between the three forms of businesses is the owners’ liability over the organizations’ debts. While a sole proprietor is liable for all of the business’ liabilities, corporations and limited liability companies’ owners have limited liabilities that are restricted to their share contributions. Another difference be tween the forms of business organizations is the legal requirements to which they are subjected. While a sole proprietorship only requires the filing of the enterprise’s name, corporation, and limited liability companies must be registered. The organizations’ tax liabilities are also treated differently. While a sole proprietorship is taxed as a natural person through the proprietor’s income, a limited liability company is taxed at the business organization’s level while a corporation’s taxation involves a double taxation in which the organization’s earnings are taxed and shareholders are taxed on their dividends. The organizations also differ in their structural requirements.